C

Glossary · PSX term

Compounding.

Compounding is earning returns on your past returns, so growth accelerates over time.

Definition

When gains and reinvested dividends generate further gains, money can grow faster the longer it stays invested. Even modest annual returns can build substantial wealth over decades.

Worked example

Reinvesting dividends from HBL over 20 years can grow holdings far beyond simple price appreciation.

Related on PSX Clarity

More glossary terms

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Capital gain tax

Capital gain tax is tax applied to gains from selling securities. Pakistani investors should verify current rules, rates, filer status, and holding-period treatment from official sources before calculating net returns.

Current ratio compares current assets with current liabilities. It gives a quick view of short-term liquidity, especially for working-capital-heavy businesses.

Cum-dividend means a share is trading with the right to the upcoming declared dividend still attached.

Circuit breaker

A circuit breaker is the maximum percentage a single stock's price can move up or down in one PSX session.

Central Depository Company (CDC)

The CDC is the institution that holds PSX shares electronically and records who owns them.

CDC Investor Account

A CDC Investor Account holds your shares directly with the CDC rather than inside a broker's pooled account.

Cash-settled futures

Cash-settled futures settle in cash for the price difference, with no shares changing hands.

The coupon rate is the annual interest a bond pays, stated as a percentage of its face value.

Consumer Price Index (CPI)

The CPI measures the average change in prices of a basket of goods and services households buy.