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Glossary  

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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Acceptance Paper - A colloquial term for short-term promissory notes issued by sales finance companies to fund loans to consumers for cars, appliances, etc. See also Finance Company Paper

Accounts Payable - Money owed by a company for goods or services purchased, payable within one year. A current liability on the balance sheet.

Accounts Receivable - Money owed to a company for goods or services it has sold, for which payment is expected within one year. A current asset on the balance sheet.

Accrued Interest - Interest accumulated on a bond or debenture since the last interest payment date.

Acquisition Fee - See Load.

Additional Offering - An offering that is subsequent to an initial public offering and adds to the outstanding number of shares a company has previously issued.

Adjusted Cost Base - The deemed cost of an asset representing the sum of the amount originally paid plus any additional costs, such as brokerage fees and commissions.

Administrators - A general term used to describe the regulatory authorities in Canada.

Affiliated Company - A company with less than 50% of its shares owned by another corporation, or one whose stock, with that of another corporation, is owned by the same controlling interests.

After Acquired Clause - A protective clause found in a bond's indenture or contract that binds the bond issuer to pledging all subsequently purchased assets as part of the collateral for a bond issue.

Agent - An investment dealer operates as an agent when it acts on behalf of a buyer or a seller of a security and does not itself own title to the securities at any time during the transactions. See also Principal.

Allocation - The administrative procedure by which income generated by the segregated fund's investment portfolio is flowed through to the individual contract holders of the fund.

Alternative Trading Systems (ATS) - Privately-owned computerized networks that match orders for securities outside of recognized exchange facilities. Also referred to as Proprietary Electronic Trading Systems (PETS) or Non-SRO-Operated Trading Systems (NETS).

American Depository Receipts (ADRs) - A system devised by the American investment community, whereby the original stock certificate of a foreign security is registered in the name of an American trust company or a U.S. bank and held in safekeeping by them. The trust company or bank then issues receipts against this stock, and these are traded as ADRs. The system developed because purchasers of foreign securities found that it could take several months to have foreign stock shares registered in their name.

American Option - An option that can be exercised at any time during the option's lifetime. See also European Option.

Amortization - Gradually writing off the value of an intangible asset over a period of time. Commonly applied to items such as goodwill, improvements to leased premises, or expenses of a new stock or bond issue. See also Depreciation.

Annual Information Form (AIF) - A document which contains information, required by law, which is not included in a mutual fund or other company's simplified prospectus or annual financial statements. Investors do not have to be given a copy of the AIF but the prospectus must state that it is available on request.

Annual Report - The formal financial statements and report on operations issued by a company to its shareholders after its fiscal year-end.

Annuitant - Person on whose life the maturity and death benefit guarantees are based. It can be the contract holder or someone else designated by the contract holder. In registered plans, the annuitant and contract holder must be the same person.

Annuity - A contract usually sold by life insurance companies that guarantees an income to the beneficiary or annuitant at some time in the future. The income stream can be very flexible. The original purchase price may be either a lump sum or a stream of payments. See Deferred Annuity and Immediate Annuity.

Arbitrage - The simultaneous purchase of a security on one stock exchange and the sale of the same security on another exchange at prices which yield a profit to the arbitrageur.

Arrears - Interest or dividends that were not paid when due but are still owed. For example, dividends owed but not paid to cumulative preferred shareholders accumulate in a separate account (arrears). When payments resume, dividends in arrears must be paid to the preferred shareholders before the common shareholders.

Ask - The lowest price a seller will accept for the financial instrument being quoted. See also Bid.

Asset Allocation - Apportioning investment funds among different categories of assets, such as cash, fixed income securities and equities. The allocation of assets is built around an investor's risk tolerance.

Asset Mix - The percentage distribution of assets in a portfolio among the three major asset classes: cash and equivalents, fixed income and equities.

Assets - Everything a company or a person owns or has owed to it. A balance sheet category.

Assignment - The random process by which the clearing corporation allocates the exercise of an option to a member firm. A client of that member firm is then chosen to fulfil the obligation taken on when the option was written, by: in the case of a put, purchasing the underlying security from the put holder; or, in the case of a call, delivering the underlying security to the call holder. See also Exercise.

Associated Company - A company owned jointly by two or more other companies.

At-the-Money - An option with a strike price equal to (or almost equal to) the market price of the underlying security.

Attribution Rules - A Canada Customs and Revenue Agency rule stating that an investor cannot avoid paying taxes at their marginal rate by transferring assets to other family members who have lower personal tax rates.

Auction Market - Market in which securities are bought and sold by brokers acting as agents for their clients, in contrast to a dealer market where trades are conducted over-the-counter. For example, the Toronto Stock Exchange is an auction market

Audit - A professional review and examination of a company's financial statements required under corporate law for the purpose of ensuring that the statements are fair, consistent and conform with Generally Accepted Accounting Principles (GAAP).

Authorized Shares - The maximum number of common (or preferred) shares that a corporation may issue under the terms of its charter.

Automatic Stabilizers - Elements in the economy which mitigate the extremes of the business cycle by running counter to it. Example: government payouts for unemployment insurance in recessionary periods.

Averages - A statistical tool used to measure the direction of the market. The most common average is the Dow Jones Industrial Average.

Averaging - See Dollar Cost Averaging.

Averaging Down - Buying more of a security at a lower price than the original investment. Aim: to reduce the average cost per unit. See Dollar Cost Averaging.

 

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