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GLOSSARY
Cosign
To cosign is to take equal responsibility in another person's debt. The person who cosigns (called the cosigner) must repay the debt if the borrower defaults.
Cosigner
A cosigner, or co-signer, is one who agrees to take responsibility for a debt if the borrower defaults. A loan applicant who doesn't qualify for a loan may be able to obtain financing anyway if he can convince a family member to be a cosigner. The presence of a qualified cosigner makes the loan significantly more attractive to the lender.
Cost basis
Cost basis is the original price paid for an investment or asset, including commissions and fees. The cost basis is used to calculate capital gains or losses for tax purposes. The capital gain or loss would be the price for which the investment or asset is sold plus fees, minus the cost basis.
Cost of debt capital
Cost of debt capital is the average rate of interest that a business is paying on all borrowed funds. The cost of debt capital is an important metric for determining the breakeven point on proposed capital projects, where such projects require debt financing.
Cost of Deposit Index (CODI)
The Cost of Deposit Index (CODI) is one of several indexes commonly used to set the adjustment amount of an adjustable rate mortgage (ARM). CODI is calculated as a 12-month rolling average of three-month certificate of deposit, yields as reported by the Federal Reserve Board.
Cost of funds
Cost of funds is the rate of interest a financial institution is charged for borrowing money. Banks and financial institutions use their cost of funds to set interest rates on money they lend to their customers.
Cost of funds index (COFI)
It is one among many indexes used to calculate the changes in interest rates for some ARMs. It stands for the the weighted-average cost of savings, borrowings, and advances for some banks, savings and loans in the 11th District members of the Federal Home Loan Bank of San Francisco.
Cost of goods sold
Cost of goods sold or COGS is the direct expense associated with obtaining or producing the inventory that is sold during a specific reporting period.
Cost of living adjustment - COLA
Cost of living adjustment, or COLA, is a change to wages or Social Security income that corresponds to movements in the Consumer Price Index. The Consumer Price Index is a measure of inflation, and the cost of living adjustment is intended to address changes in purchasing power. Generally, cost of living adjustments are additive to wages.
Cost of savings index - COSI
Cost of savings index, or COSI, is a weighted average of interest rates paid on savings accounts. Originally, COSI was based on the rates paid by subsidiaries of Golden West Financial Corporation (GDW) that operated as World Savings. The index was used as a benchmark rate for adjustable-rate mortgages (ARMs). Since World Savings merged with Wachovia, however, the original COSI is still published but no longer used for new mortgages. Wachovia publishes a similar monthly index, called the W-COSI, which is used for new ARMs.
Cost-of-funds index
The cost-of-funds index is a measure of the interest rates paid on deposits held within the San Francisco Federal Home Loan Bank District. The index is used as a benchmark for adjustable-rate mortgages (ARMs).
Cost-plus contract
A cost-plus contract is a type of agreement used in construction projects, where the contractor's fee is calculated by applying a certain percentage to the total cost of labor and materials.
Coterminous
Coterminous describes two things that have the same border or boundary. In lending, coterminous specifically means having the same maturity date as another loan. If a borrower takes out a second mortgage, for example, the lender may set the maturity date to be the same as the first mortgage's maturity. Doing so would make the two debts coterminous.
Counteroffer
The rejection of an initial purchase offer by submission of another offer with different terms (such as price or closing date).
Coupon
Coupon, in finance, is the stated interest rate of a fixed-income security. If a bond is issued with a stated rate of 5 percent, it's said to have a 5 percent coupon. The term is derived from the usage of tear-off coupons with paper bonds; the bondholder would have to remove and redeem the coupon to receive the periodic interest payment.