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A sales charge applied on the redemption of a mutual fund.
Balance of Payments
Canada's interactions with the rest of the world which are captured here in the current account and capital account.
A financial statement showing a company's assets, liabilities and shareholders' equity on a given date.
In some serial bond issues or mortgages an extra-large amount may mature in the final year of the series - the "balloon" payment.
Bank of Canada
Canada's central bank which exercises its influence on the economy by raising and lowering short-term interest rates.
The minimum rate at which the Bank of Canada makes short-term advances to the chartered banks, other members of the Canadian Payments Association and investment dealers who trade in the money market.
A commercial draft (i.e., a written instruction to make payment) drawn by a borrower for payment on a specified date. A BA is guaranteed at maturity by the borrower's bank. As with T-bills, BAs are sold at a discount and mature at their face value, with the difference representing the return to the investor. BAs may be sold before maturity at prevailing market rates, generally offering a higher yield than Canada T-bills.
A group of investment firms, each of which individually assumes financial responsibility for part of an underwriting.
The legal status of an individual or company that is unable to pay its creditors and whose assets are therefore administered for its creditors by a Trustee in Bankruptcy.
One-hundredth of a percentage point of bond yields. Thus, 1% represents 100 basis points.
One who expects that the market generally, or the market price of a particular security, will decline. See also Bull.
A sustained decline in equity prices. Bear markets are usually associated with a downturn (recession or contraction) in the business cycle.
A security (stock or bond) which does not have the owner's name recorded in the books of the issuing company nor on the security itself and which is payable to the holder, i.e., the holder is the deemed owner of the security. See also Registered Security.
The real (underlying) owner of an account, securities or other assets. An investor may own shares which are registered in the name of an investment dealer, trustee or bank to facilitate transfer or to preserve anonymity, but the investor would be the beneficial owner.
The individual or individuals who have been designated to receive the death benefit. Beneficiaries may be either revocable or irrevocable.
Best Efforts Underwriting
The attempt by an investment dealer (underwriter) to fulfill a customer's order or to sell an issue of securities, to the best of their abilities, but does not guarantee that any or all of the issue will be sold. The investment dealer is not held liable to fulfill the order or to sell all of the securities. The underwriter acts as an agent for the issuer in distributing the issue.
A measure of the sensitivity (i.e., volatility) of a stock or a mutual fund to movements in the overall stock market. The beta for the market is considered to be 1. A fund that mirrors the market, such as an index fund, would also have a beta of 1. Funds or stocks with a beta greater than 1 are more volatile than the market and are therefore riskier. A beta less than 1 is not as volatile and can be expected to rise and fall by less than the overall market.
The highest price a buyer is willing to pay for the financial instrument being quoted. See also Ask.
An active, leading, nationally known common stock with a record of continuous dividend payments and other strong investment qualities. The implication is that the company is of "good" investment value.
A slang term for laws that various Canadian provinces and American states have enacted to protect the public against securities frauds. The term blue skyed is used to indicate that a new issue has been cleared by a securities commission and may be distributed.
A regular, uniform trading unit, set by a marketplace for the purposes of trading on that marketplace.
A Certificate evidencing a debt on which the issuer promises to pay the holder a specified amount of interest based on the coupon rate, for a specified length of time, and to repay the loan on its maturity. Strictly speaking, assets are pledged as security for a bond issue, except in the case of government "bonds", but the term is often loosely used to describe any funded debt issue.
The actual legal agreement between the issuer and the bondholder. The contract outlines the terms and conditions ? the coupon rate, timing of coupon payments, maturity date and any other terms. The bond contract is usually administered by a trust company on behalf of all the bondholders. Also called a Bond Indenture or Trust Deed.
See Bond Contract.
An investment strategy whereby the investor may sell one bond and replace it with another, to capture some advantage such as yield improvement.
The amount of net assets belonging to the owners of a business (or shareholders of a company) based on balance sheet values. It represents the total value of the company's assets that shareholders would theoretically receive if a company were liquidated. Also represents the original cost of the units allocated to a segregated fund contract.
Bottom-Up Investment Approach
An investment approach that seeks out undervalued companies. A fund manager may find companies whose low share prices are not justified. They would buy these securities and when the market finally realizes that they are undervalued, the share price rises giving the astute bottom up manager a profit. See also Top-Down Investment Approach.
A new issue of stocks or bonds bought from the issuer by an investment dealer, frequently acting alone, for resale to its clients, usually by way of a private placement or short form prospectus. The dealer risks its own capital in the bought deal. In the event that the price has to be lowered to sell out the issue, the dealer absorbs the loss.
Bourse de Montréal
A stock exchange (also referred to as the Montréal Exchange) that deals exclusively with non-agricultural options and futures in Canada, including all options that previously traded on the Toronto Stock Exchange and all futures products that previously traded on the Toronto Futures Exchange.
An investment dealer or a duly registered individual that is registered to trade in securities in the capacity of an agent or principal and is a member of a Self- Regulatory Organization.
Broker of Record
The broker named as the official advisor to a corporation on financial matters; has the right of first refusal on any new issues.
Confirming a transaction where no trade has been executed.
Occurs when total spending by the government for the year is higher than revenue collected.
Occurs when government revenue for the year exceeds expenditures.
One who expects that the market generally or the market price of a particular security will rise. See also Bear.
A general and prolonged rising trend in security prices. Bull markets are usually associated with an expansionary phase of the business cycle. As a memory aid, it is said that a bull walks with his head up while a bear walks with his head down.
The recurrence of periods of expansion and recession in economic activity. Each cycle is expected to move through five phases: the trough, recovery, expansion, peak, contraction (recession). Given an understanding of the relationship between the business cycle and security prices an investor or fund manager would select an asset mix to maximize returns.
The risk inherent in a company's operations, reflected in the variability in earnings. A weakening in consumer interest or technological obsolescence usually causes the decline. Examples include manufacturers of vinyl records, eight track recording tapes and beta video machines.
A company's purchase of its common shares either by tender or in the open market for cancellation, subsequent resale or for dividend reinvestment plans.
If a client or a broker fails to deliver securities sold to another broker within a specified number of days after the value (settlement) date, the receiving broker may buy-in the securities in the open market and charge the client or the delivering broker the cost of such purchases.