Shared Flashcard Set

Details

CSC
Canadian Securities Course Exam 1
434
Business
Not Applicable
06/07/2008

Additional Business Flashcards

 


 

Cards

Term
Alternative Trading Systems (ATSs)
Definition
privately owned computerized networks that match orders for securities outside recog exchange facilities; also "Proprietary Electronic Trading Systems" (PETS) or "Non-SRO-Operated Trading Systems" (NETS)
Term
Approved Participants
Definition
firms who have access to the trading facilities of a stock exchange
Term
Auction Market
Definition
clients' bids + offers for stock channeled to single
central market + compete against each other; i.e. stock exchange; market in which securities bought + sold by brokers acting as agents for client; opposite of dealer market where trades conducted OTC
Term
Bourse de Montreal
Definition
trades all financial + equity futures + options; non-agricultural options + futures incl all ops previously traded on TSX + futures contacts previously traded on Toronto Futures Ex
Term
Budget
Definition
details estimate of revenues + expenses which results in projection of budget surplus/deficit
Term
Canadian Trading + Quotation System (CNQ)
Definition
alternative equities market to TSX Venture Exchange for emerging companies; est 2003
Term
Canadian Unlisted Board Inc. (CUB)
Definition
offers Internet web-based system
for dealers to reported completed trades in unlisted and unquoted
equity securities in Ontario
Term
CanDeal
Definition
offers institutional investors electronic access to federal bond bid + offer, prices + yields frm its 6 bank-owned dealers (80% of trans in bond market)
Term
CanPX
Definition
joint venutre of several IDA member firms + ops as electronic trading system for fixed-income securities providing investors w/ real-time bid + offer prices + hourly trade data; Govt of Canada bonds, treasury bills, prov bonds + some corp bonds
Term
Capital
Definition
wealth; real, material things (land, buildings) and
representational items (money, stocks, bonds)
Term
Capital Gains
Definition
positive difference between purchase price and selling
price of an investment
Term
CBID
Definition
electronic trading system for fixed-income securities; operates 2 marketplaces, retail (accessible by registered dealers on behalf of retail clients) + institutional (accessible by registered dealers, institutional investors, govts + pension funds)
Term
Common Shares
Definition
gives shareholders right to vote @ comp annual meeting; securities representing ownership in comp; entitled to receipt of dividends if declared
Term
Dealer Markets
Definition
network of dealers who trade with each other, usually
over telephone/computer; i.e. bond market; securities bought and sold over-the-counter; dealers act as principals for clients; unlisted market
Term
Debt
Definition
that which is owed; means of using future purchasing power in the present before a summation has been earned; money borrowed frm lender + borrower usually pays interest + must repay @ set date
Term
Derivative
Definition
products based on / derived from underlying instrument (ex. stock index, financial asset, commodity, interest rate, currency)
Term
Equity
Definition
investment made by the owners or stockholders of a business; net worth in a business
Term
Institutional Investors
Definition
orgs, such as pension/mutual fund comp, that
trade large volumes of securities + typically have a steady flow of $ to invest
Term
Investment Advisors (IAs)
Definition
intermediaries between buyers and sellers,
acting on clients' behalf in securities market
Term
Investment Fund
Definition
company/trust that manages investments for its clients
Term
Market Capitalization
Definition
total value of a company's stock; market's
valuation of a company at a given time, calculated by multiplying # of
outstanding shares by current stock price
Term
Market Makers
Definition
hold inventory of securities which they've agreed to
"make a market", sell from inventory to buyers and add to inventory when acquire securities frm sellers; post individual bid and ask quotations (OTC market)
Term
Mutual Fund
Definition
fund raises capital by selling shares/units to
investors, invests that capital, then unitholders receive part of $ made from investment
Term
Open-end Fund
Definition
mutual fund with no limit to the # of shares that can be issued
Term
Option
Definition
grants holder the right, but not obligation, to buy/sell a
certain quantity of underlying instrument at set price for set period of time
Term
Participating Organizations
Definition
Approved Participants; firms who have access to the trading facilities of a stock exchange
Term
Personal Disposable Income
Definition
amt of after-tax income available for
purchase of goods and services
Term
Preferred Shares
Definition
owners entitled to fixed dividend that must be paid
out of earnings before any dividend payed to common shareowners; don't
usually have a vote on direction of management unless comp doesn't pay
dividends
Term
Primary Market
Definition
market where security sold when first issued + sold
to investors
Term
Quotation and Trade Reporting Systems (QTRS)
Definition
recognized stock markets that operate like exchanges and provide facilities for users to post quotations + report trades
Term
Retail Investors
Definition
individual investors who buy + sell securities for
their own personal accounts (not for another comp/org)
Term
Secondary Market
Definition
where subsequent trading takes place; where
individual investors trade among themselves
Term
Stock Exchange
Definition
marketplace where buyers + sellers of securities meet
to trade w/ each other; prices established according to laws of supply + demand
Term
Toronto Stock Exchange (TSX)
Definition
lists senior equities, some debt
instruments convertible into listed equity, income trusts, ETFs
Term
TSX Venture Exchange
Definition
trades junior securities, a few debenture issues
Term
Winnipeg Commodity Exchange (WCE)
Definition
trades agricultural futures + options
Term
Agent
Definition
role of investment dealer; broker acts for/on behalf of
buyer/seller but doesn't itself own title to securities
Term
Canadian Depository for Securities (CDS)
Definition
where Canadian securities cleared
Term
Closed-end Funds
Definition
normally issue shares only @ start-up/other
infrequent periods + reinvest proceeds + borrowings in protfolio of securities to produce income + cap gain
Term
Demutualization
Definition
process where insurance comps (owned by
policyholders) reorganize into comps owed by shareholders (policyholders become shareholders)
Term
Market-out Clause
Definition
dealer may, under exceptional circumstances,
terminate financing agreement before completion
Term
Open-end Fund
Definition
continually issue shares to investors + redeem shares
on demand @ their net asset/"break-up" value/share of fund's investment portfolio
Term
Primary Distribution
Definition
original sale of comp's securities; new security issue
Term
Principal
Definition
role of investment dealer; securities firm owns securities as part of own inventory @ some stage in buying/selling trans w/ investors
Term
Segregated Funds
Definition
type of mutual fund sold by insurance brokers which
is guaranteed to return all/part of initial investment (may be protected frm creditors under certain circumstances)
Term
Self-Regulatory Organizations (SROs)
Definition
Investment Dealers Assn of
Canada; Mutual Funds Dealers Assn; Market Regulation Services Inc.;
Bourse de Montreal; TSX; TSX Venture; organizations that play
regulatory role in securities industry by setting rules governing many
aspects of their members' operations, like sales + finance
Term
Underwriting
Definition
investment bank buys the securities from the company
and immediately resells the securities to investors for a slightly higher price, making money on the spread
Term
Arbitration
Definition
method of dispute resolution where independent arbitrator can listen to facts + arguments of parties to a dispute, decide how dispute should be resolved, and decide what remedy should be imposed
Term
Autorite des marches financieres (AMF)
Definition
responsible for administering reg framework for Quebec's financial sector (notably insurance, deposit insurance insts, distribution of financial products, financial services, + securities); intended to simplify procedures for consumers + industry members; verifies competence + integrity of industry participants through education requirements, certification + registration process; resource for consumers to obtain financial info; facility for lodging complaints
Term
Beneficial Owner
Definition
person(s) entitled to the benefits of ownership even though another party such as a broker or bank--the nominal owner--actually has possession
Term
Canada Deposit Insurance Corporation (CDIC)
Definition
insures eligible deposits up to 100,000 per depositor in each member inst (banks, trust + loan comps) + reimburses depositors if member inst fails
Term
Canadian Investor Protection Fund (CIPF)
Definition
not-for-profit corp est by the CDN investment industry in 69 to protect investor assets in event ofmember's bankruptcy; funded by CIPF members (approx 200 investment dealers in Can); investors auto receive coverage by opening acct w/ member and coverage ltd to $1,000,000 for any combo of cash/securities held; when member becomes bankrupt, CIPF moves the investor's acct (w/in limits of coverage, to another investment dealer where investor can access it)
Term
Canadian Securities Administrators (CSA)
Definition
forum to co-ordinate + harmonize regulation of CDN cap markets; want to give Can a securities reg system that protects investors frm unfair, improper/fraudulent practices
Term
Direcor's Circular
Definition
must be sent to security holders of target comp w/in 15 days of date of bid - board of directors of comp need to provide info + include that they will accept or reject bid + reasons why (if not done have to issue statement that they can't do this and why)
Term
Fiduciary Obligation
Definition
obligation as a person who essentially holds the character of a trustee
Term
Insiders
Definition
director/senior officer of comp/a subsidiary; person/comp (excluding underwriters in course of pub distrib) beneficially owning, directly/indirectly or controlling/directing +10% of voting shares of comp; director/senior officer of comp which is itself insider of comp due to ownership, control or direction over +10% of voting shares of comp involved; reporting issuer where has purchased, redeemed or otherwise acquired any of its securities, for so long as holds any of its securities
Term
Investment Advisor (IA):
Definition
person who, for compensation (a flat fee or percentage of assets managed), offers investment advice
Term
Investment Representatives (IRs)
Definition
proficiency requirements similar to IAs, but training period = 30 days and it's a 30-month requirement
Term
Material Change
Definition
any change in comp that would have signif effect on market price/value
Term
National Policies
Definition
attempt to create reg environment consistent + applicable across country
Term
National Registration Database (NRD)
Definition
web-based system used by investment dealers + employees to file registration forms electronically when applying for approval by one/more of stock exchanges, CSA, or IDA
Term
New Account Application Form
Definition
first step in complying w/ reg is completion of this prior to acceptance of any order
Term
Nominee
Definition
bank, investment dealer, or CDN Depository for Securities that has possession of securities but is not beneficial owner
Term
Office of the Superintendent of Financial Institutions (OSFI)
Definition
responsible for regulating + supervising banks, insurance, trust, loan + investment comps, + co-op credit assts that are chartered, licensed/registered by fed govt; supervises +1200 fed regulated pension plans; doesn't regulate securities industry; provides actuarial advice to fed govt; conducts review of certain provincially chartered financial insts by virtue of fed-prov arrangements through agency agreements w/ CDIC
Term
Ombudsman for Banking Services and Investments (OBSI)
Definition
other outlet for investors who feel have been treated unfairly; indy org that investigates customer complaints against financial services providers (incl banks + other deposit=taking orgs, investment dealers and mutual fund dealers/comps); provides prompt + impartial resolution of complaints that customers have not been able to resolve w/ financial services provider
Term
Proxy
Definition
power of attorney given by shareholder that gives designated person authority to vote shareholder's stock
Term
Reporting Issuer
Definition
corp that has issued and outstanding securities held by the public and is subject to the continuous disclosure requirements of securities
Term
Right of Action for Damages
Definition
issuer, directors of issuer, seller of security, underwriter who signs certificate for prospectus + any other person who signs prospectus may be liable for damages if contains misrepresentation
Term
Right of Rescission
Definition
right of a purchaser of a new issue to withdraw from the purchase agreement within the specific province's applicable time limits if the prospectus contained an untrue statement or omitted a material fact
Term
Right of Withdrawal
Definition
right of a purchaser of a new issue to withdraw from the purchase agreement within two business days after receiving the prospectus
Term
Self-Regulatory Organizations (SROs)
Definition
industry orgs that have privilege of regulating their own members; responsible for enforcement of their members' conformity w/ securities legislation + have power to prescribe own rules of conduct + financial requirements for members
Term
Takeover Bid
Definition
offer to shareholders to purchase shares of comp that, w/ offeror's already owned securities, will in total exceed 20% of outstanding voting/equity securities
Term
Universal Market Integrity Rules (UMIR)
Definition
common set of trading rules consistently in all markets in Can
Term
Balance of Payments
Definition
detailed statem of country's economic transfers w/ rest of world for given period of time (quarter or year); 2 components = current + cap account
Term
Business Cycle
Definition
fluctuations in output + employment
Term
Capital Account
Definition
cap transfers and acquisitions/disposal of non-produced, non-financial assets (like fixed assets or inventories); shows the redistribution of cap assets btwn sectors of economy and rest of world
Term
Coincident Indicators
Definition
change @ approx same time + same direction as whole economy, providing info abt current state of it
Term
Composite Leading Indicator
Definition
StatsCan's combo of 10 leading indicators into a single index of leading indicators
Term
Consumer Price Index (CPI)
Definition
one of most widely used indicators of inflation; considered measure of cost of living in Can
Term
Cost-push Inflation
Definition
when cost of production output rises (higher costs push inflation higher)
Term
Current Account
Definition
net balance of a country's int payment arising from exports and imports together w/ unilateral transfers such as aid and migrant remittances (excludes cap flows)
Term
Cyclical unemployment
Definition
tied directly to fluctuations in biz cycle; rises when economy weakens + firms lay off workers, drops when economy strong again
Term
Deflation
Definition
sustained fall in prices where annual change in CPI is negative year after year; opposite of inflation
Term
Deflation
Definition
requirement
Term
Demand-pull Inflation
Definition
when higher and continued consumer demand pushes inflation higher
Term
Discouraged Workers
Definition
unemployed who drop out of labour force bcs job prospects too poor; available + willing to work but can't find jobs + haven't made specific effort to find job w/in previous month; not included as part of labour force
Term
Disinflation
Definition
decline in rate @ which prices rise; decrease in rate of inflation (prices still rising, but at slower rate)
Term
Economic Indicators
Definition
statistics/data series that are used to analyze biz conditions + current economic activity
Term
Equilibrium Price
Definition
when supply price = demand price
Term
Exchange Rate
Definition
price of one currency in terms of another
Term
Factors of Production
Definition
resources that consumers, firms, + govts use to produce goods + services
Term
Final Good
Definition
finished product, purchased by ultimate end user
Term
Fixed Exchange Rate
Definition
country's central bank maintains domestic currency @ fixed level against another currency / composite of other currencies
Term
Floating Exchange Rate
Definition
central bank allows market forces to determine value of currency
Term
Frictional Unemployment
Definition
esult of normal labour turnover (people entering + leaving work force; ongoing creation + destruction of jobs)
Term
Full Employment
Definition
level below which unemployment will not drop w/o causing neg effects; @ this level, economy thought to be operating @ close to full potential/capacity
Term
Gross Domestic Product (GDP)
Definition
market value of all final goods + services produced w/in a country in given time period (usually a year/a quarter)
Term
Gross National Product
Definition
total market value of all G&S produced by only Can nationals, whether G&S produced in Can or other country
Term
Interest Rate
Definition
amt lender charges borrower for loan presented as % of total amt borrowed
Term
Labour Force
Definition
sum of working-age pop who are employed/unemployed
Term
Lagging Indicators
Definition
change after economy changes; can confirm that biz cycle pattern occurring
Term
Leading Indicators
Definition
tend to peak + trough before overall economy (designed to anticipate emerging trends in economic activity)
Term
Market
Definition
arrangement that allows buyers + sellers to conduct business w/ each other
Term
Macroeconomics
Definition
focuses on performance of economy as a whole; looks @ broader picture + to challenges facing society as result of limited amts of natural resources, human effort + skills, + tech; while microeconomics looks @ how individual is impacted by changes in prices + income levels, macroeconomics focuses on unemployment, inflation, recessions, govt spending + taxation, poverty + inequality, budget deficits + national debts
Term
Microeconomics
Definition
analyzes market behaviour of individual consumers + firms, how prices determine production, distrib, and use of goods + services; ex. consumer decides how much of good to purchase, workers decide what jobs to take, firm decides how many workers to hire + how much output to produce
Term
Monetary Aggregates
Definition
ways to measure amt of $ in circulation
Term
Natural Unemployment Rate
Definition
level below which unemployment will not drop w/o causing neg effects; @ this level, economy thought to be operating @ close to full potential/capacity
Term
Nominal GDP
Definition
dollar value of all G&S produced in given year @ prices that prevailed in same year
Term
Nominal Interest Rate
Definition
rate where effects of inflation haven't been removed
Term
Non-Accelerating Inflation Rate of Unemployment (NAIRU)
Definition
level below which unemployment will not drop w/o causing neg effects; @ this level, economy thought to be operating @ close to full potential/capacity
Term
Output Gap
Definition
ndicator used to measure inflation pressures in economy by looking @ difference btwn real GDP and potential GDP
Term
Participation Rate
Definition
represents share of working-age pop that's in labour force; shoes willingness of people to enter work force + take jobs
Term
Phillips Curve
Definition
trade-off btwn unemployment + inflation such that lower level of unemployment is associated w/ higher level of inflation
Term
Potential GDP
Definition
what economy capable of producing when existing inputs of labour, cap, + tech fully employed @ normal levels of use; max level of real GDP that economy can maintain w/o inflation increasing
Term
Real GDP
Definition
constant dollar GDP; dollar value of all G&S produced in a year valued @ price that prevailed in some base year; inflation adjusted
Term
Real Interest Rate
Definition
nominal interest rate minus expected inflation rate over term of loan
Term
Sacrifice Ratio
Definition
used to gauge cost of disinflation; describes extent to which GDP must be reduced w/ increased unemployment to achieve 1% decrease in inflation rate
Term
Soft Landing
Definition
biz cycle phase when economic growth slows sharply but doesn't turn negative, while inflation falls / remains low
Term
Strucural Unemployment
Definition
workers unable to find work / fill available jobs bcs lack necessary skills, don't live where job available / decide not to work @ wage offered; closely tied to changes in tech, int competition + govt policy
Term
Supply
Definition
provision
Term
Terms of Trade
Definition
ratio of export prices to import prices
Term
Unemployment Rate
Definition
represents share of labour force unemployed/looking for work
Term
Automatic Stabilizers
Definition
institutional feature of an economy that dampens its macroeconomic fluctuations
Term
Bank Rate
Definition
min rate @ which Bank will lend $ on short-term basis to chartered banks + other members of Canadian Payments Assn (CPA) in role as lender of last resort
Term
Basis Points
Definition
one hundredth of one percentage point or 0.01%
Term
Budget Deficit
Definition
if total spending for year higher than revenue collected
Term
 Budget Surplus
Definition
if revenue collected during year exceeds spending
Term
Canadian Payments Association (CPA)
Definition
not-for profit assn est 1980 by CDN Payments Act, to "establish and operate national systems for the clearing and settlement of payments and other arrangements for the making or exchange of payments" w/in Can; reg body for settlement + claering of payments; Minister of Finance responsible for overseeing ops
Term
Drawdown
Definition
trans of deposits to Bank frm chartered banks, draining supply of available cash balances frm banking system; causes contraction in availability of loans to consumers + bizs, which places upward pressure on interest rates
Term
Fiscal Agent
Definition
organization, such as a bank or trust company, that takes responsibility for the fiscal duties of an unrelated party
Term
Fiscal Policy
Definition
use of govt's spending + taxation powers to pursue economic goals like full employment + sustained long-term growth
Term
Keynesian Economics
Definition
advocates use of direct govt. intervention as means of achieving economic growth + stability
Term
Large Value Transfer System (LVTS)
Definition
allows participating financial insts to conduct large transactions w/ each other through electronic wire system
Term
Monetarist Theory
Definition
economy inherently stable and (left to own self-adjusting mechanism) will auto move to stable path of growth
Term
Monetary Policy
Definition
sets out to improve performance of economy by regulating growth in money supply + credit
Term
National Debt
Definition
accumulation of total govt. borrowing over time; sum of past deficits - sum of past surpluses
Term
Overnight Rate
Definition
interest rate set in overnight market
Term
Rational Expectations Theory
Definition
firms + workers are rational thinkers + can evaluate all consequences of govt. policy decision (neutralizing intended impact of policy)
Term
Redeposit
Definition
trans of funds frm Bank to chartered banks; adding $ to system places downward pressure on interest
Term
Sale and Repurchase Agreements (SRAs)
Definition
used to offset undesired downward pressure on overnight financing costs; Bank offers to sell govt securities to chartered banks w/ agreement to repurchase them next day @ predetermined price
Term
Special Purchase and Resale Agreements (SPRAs)
Definition
used to relieve undesired upward pressure on overnight financing rates; Bank offers to buy govt securities frm primary dealer (like chartered bank) w/ agreement to sell them back the next day @ predetermined price
Term
Supply-side Economics
Definition
to foster environment of prosperity, market should be left on its own + govt. intervention should be held to min
Term
After-acquired Clause
Definition
provides that, in add to property owned @ time of issue, all other property that comp may acquire during life of bond issue will auto come under mort to provide add security to bondholders
Term
Bond
Definition
secured by physical assets in trust deed written into bond contract
Term
Callable Bond
Definition
bond w/ redemption feature
Term
Canada Savings Bonds (CSBs)
Definition
can be purchased only btwn Oct + April of each year, but can be cashed by owner @ any bank in Can @ any time; not transferable (have no secondary market) so don't rise + fall in price and may always be cashed @ full par value + accrued interest
Term
Canada Yield Call
Definition
allow issuer to call bond @ price based on great of par or price based on yield of equivalent-term govt. of Can bond + yield spread (add amt of yield)
Term
Closed-end Mortgage
Definition
mortgage principal amt fixed + can't be inc during life of loan
Term
Collateral Trust Bond
Definition
bond that is secured by financial asset (like stock/other bonds) that is deposited + held by trustee for holders of bond

Term
Conversion Price
Definition
price @ which convertible securities (bond/preferred stock) can be converted into common stock @ set conversion ratio 
Term
Convertible Bonds
Definition
combine certain advantages of bond w/ option of ex bond for common shares
Term
Coupon Rate
Definition
many bonds pay regular interest @ this rate
Term
Debenture
Definition
may be secured by something other than physical asset (ex general claim on residual assets / issuer's credit rating)
Term
Dominion Bond Rating Service
Definition
credit rating agency based in Toronto;  est. 1976, one of largest credit rating agencies in Can
Term
Election Period
Definition
time period in which decision to exercise maturity op on extendible + retractable bond must be made
Term
Equipment Trust Certificate
Definition
pledge equip as security instead of real property
Term
Eurobond
Definition
issued + sold outside domestic market + typically denom in currency other than that of domestic market
Term
Extendible Bonds
Definition
usually issued w/ short maturity term (usually 5 years) but w/ option for investor to ex debt for identical amt of longer-term debt (usually 10 years) @ same / slightly higher rate of interest by extension date
Term
Extension Date
Definition
maturity date of bond can be extended so that bond changes from short-term to long-term
Term
Face Value
Definition
amt bond issuer contracts to pay @ maturity (maturity value); bond trading @ 100
Term
First Mortgage Bond
Definition
first charge on comp's assets, earnings + undertakings before unsecured current liabilities are paid
Term
Fixed-income Securities
Definition
represent debt of issuing entity
Term
Floating-rate Securities
Definition
bonds w/ variable coupon rates
Term

Forced Conversion

 

Definition
innovation built into certain convertible debt issues to give issuing comp more scope in calling in debt for redemption
Term
Foreign Bonds
Definition
issued in currency + country other than issuer's
Term
Guaranteed Investment Certificates (GICs)
Definition
offer fixed rates of interest for specific term (longer than w/ term deposit); both principal + interest payments guaranteed; can be redeemable/non-redeemable
Term
Instalment Debenture
Definition
municipal security; part of bond matures in each year during term of bond
Term
Maturity Date
Definition
date @ which bond matures + principal paid back
Term
Moody's Canada Inc.
Definition
credit rating agency based in Toronto
Term
Mortgage
Definition
legal document containing agreement to pledge land, buildings / equip as security for load + entitling lender to take over ownership of these properties if borrower fails to pay interest / repay principal when due
Term
Open-end Mortgage
Definition
permits mortgagor to borrow add money up to original amt of loan after loan has been reduced, w/o rewriting mort
Term
Par Value
Definition
amt bond issuer contracts to pay @ maturity (maturity value); bond trading @ 100
Term
Payback Period
Definition
time it takes convertible to recoup premium through higher yield, compared w/ dividend that is paid on stock
Term
Principal
Definition
original amt on which interest calc
Term
Purchase Fund
Definition
fund set up to retire specified amt of outstanding bonds/debentures through purchases in market (if  can be made at/below stipulated price)
Term
Real Return Bonds
Definition
issued by govt of Can; nominal return on bonds linked to Consumer Price Index (CPI); semi-annual interest payments + final redemption value calculated by incl inflation compensation component
Term
Redeemable Bond
Definition
bond w/ redemption feature
Term
Retractable Bond
Definition
issued w/ long maturity term (usually at least 10 years) but give investors right to turn in bond for redmption @ par several years sooner (usually 5) by retraction date
Term
Serial Bond
Definition
municipal security; part of bond matures in each year during term of bond
Term
Sinking Funds
Definition
sums of $ that are set aside out of earning each year to provide for repayment of all/part of debt issue by maturity
Term
Standard & Poor's Bond Rating Service
Definition
provide indy rating services for many debt securities; AAA-D
Term
Strip Bond
Definition
created when dealer acquires block of high-quality bonds + separates individual future-dated interest coupons (bond residue) fm rest of bond
Term
Subordinated Debentures
Definition
junior to other securities issued by comp / other debts assumed by comp; exact status of issue described in prospectus
Term
Term to Maturity
Definition
remaining life of bond
Term
Treasury Bills
Definition
short-term govt obligations; offered in denominations frm $1000-$1 million; don't pay interest but are sold at a discount + mature @ 100
Term
Trust Deed
Definition
written document that grants trustee title to piece of property for benefit of another
Term
Working Capital
Definition
cash available to enterprise for day-to-day ops; loans for biz expenses
Term
Yield
Definition
approx measure of annual return on bond if held to maturity
Term
Zero Coupon Bond
Definition
created when dealer acquires block of high-quality bonds + separates individual future-dated interest coupons (bond residue) fm rest of bond
Term
Accrued Interest
Definition
amt of interest built up during previous holding period; paid @ time of purchase frm buyer to previous holder; for G of C bonds, par amt x coupon rate x time period (days of accrued interest for transaction, not including first day / 365)
Term
Bearer Bonds
Definition
bonds where an actual certificate is produced with detachable coupons and principal payment (on each coupon payment date investors "clip" coupon + submit to bank/financial inst for payment from issuer, same w/ residual principal @ maturity)
Term
Bond Switches
Definition
selling one bond and replacing it with another
Term
Canada Depository for Securities Limited (CDS)
Definition
national provider of trade clearing and settlement services
Term
Current Yield
Definition
annual cash flow / current market price x 100%
Term
Delivery
Definition
when a security is sold to an investor, it doesn't have to be delivered until the end of the settlement period
Term
Discount Rate
Definition
interest rate commensurate with perceived risk
Term
Duration
Definition
measure of the sensitivity of a bond's price to changes in interest rates; approx % change in price/value of bond for 1% change in interest rates
Term
Expectations Theory
Definition
shape of yield curve is reflection of market consensus expectations for future interest rates (ex. upward sloping curve = interest rates expected to rise in future)
Term
Liquidity Preference Theory
Definition
investors must be compensated for assuming risk of holding longer-term debt securities + this compensation = yield / liquidity premium
Term
Market Segmentation Theory
Definition
investors concentrate debt holdings in particular term to maturity (ex. inst investor may focus holdings on bonds w/ terms 2-5 years, while other investor has preference for long-term bonds)
Term
Nominal Rate
Definition
real rate + inflation rate (rate of return before inflation taken into acct)
Term
Present Value
Definition
value today of amt of $ to be received in future
Term
Registered Bonds
Definition
like bearer bonds but certificate has name of owner printer on it and can only be sold/transferred when owner signs back of certificate
Term
Reinvestment Risk
Definition
risk that coupons can't be reinvested @ same interest rate that prevailed @ time bond purchased
Term
Yield Curve
Definition
graph depicting term structure of interest rates (rates vary depending on term to maturity of various debt instruments)
Term
Yield to Maturity (YTM)
Definition
% rate of return paid on fixed income security if investor buys and holds it to maturity date; calc based on coupon rate, length of time to maturity, + market price; assumes coupon interest paid over life of bond will be reinvested at same rate
Term
Arrears
Definition
if comp's Board of Directors votes not to pay 1+ preferred dividends when due, unpaid dividends accumulate/pile up; must be paid before common dividends pair / before preferred shares redeemed
Term
Ask
Definition
lowest price potential seller offers to accept
Term
Auction Preferreds
Definition
offer dividend rate determined by auction btwn holder + issuer; rate may be based on # of orders to hold, sell / buy + typically offer reset min + max dividend rate
Term
Bid
Definition
highest price prospective buyer willing to pay
Term
Board Lot
Definition
standardized unit for securities trading on an ex
Term
Callable Preferreds
Definition
issuers reserve right to call/redeem preferred issues @ stated time + price; provide for payment of small premium above amt of per share asset entitlement fixed by charter, as compensation to investor whose shares being called in
Term
Canadian Depository for Securities Limited (CDS)
Definition
offers computer-based systems to replace certificates as evidence of ownership in securities transactions
Term
Canadian Originated Preferred Securities (COPrS)
Definition
introduced Mar 99, trademark Merrill Lynch; long-term junior subordinated debt instruments issued by CND corps; hybrid securities, offer features that resemble long-term corp bonds + preferred shares - quarterly distrib treated as regular interest income for tax purposes and trade cum dividend (ex-date declared) in that accrued interest not added to market price; comp has right to defer payments of interest up to 20 consecutive quarterly periods, not compounding
Term
Capital Gain
Definition
arises frm sale (/deemed sale) of cap property for more than cost; must be reported + 50% of gains must be incl in income for that year + taxed @ investor's marginal tax rate
Term
Consolidations
Definition
reverse of stock split
Term
Convertible Preferreds
Definition
enable holder to convert preferred into some other class of shares (usually common) @ predetermined price(s) + for stated period of time
Term
Cum Dividend
Definition
traded before ex-dividend date (dividend goes to buyer, not seller)
Term
Deferred Preferred
Definition
don't pay out regular dividend but shares mature @ preset future date + return based on purchase price + redemption value paid out @ maturity
Term
Delayed Floaters
Definition
fixed-reset/fixed floaters; shares entitle holder to fixed dividend for predetermined period of time after which dividend becomes variable
Term
Dividend Record Date
Definition
all shareholders recorded as of this date will be entitled to the dividend
Term
Dividend Reinvestment Plan
Definition
comp diverts shareholders' dividends to purchase of add shares of comp; portion of a company's profit paid to common and preferred shareholders; may be cash, property or stock
Term
Dividend Tax Credit
Definition
to alleviate double taxation, corps pay tax but shareholders gross-up amt of dividend by 45% to compensate (so in the end not taxed)
Term
Dividends
Definition
payable @ discretion of Board of Directors
Term
Dollar Cost Averaging
Definition
investing equal amounts of $ on regular basis, regardless of market performance; objective = to purchase more shares when prices low, fewer when prices high, w/ net effect of reducing average cost/share
Term
Dow Jones Industrial Average (DJIA)
Definition
includes 30 large, blue-chip stocks that trade on NYSE; computed each day by adding up current prices of 30 stocks in index + dividing by specific divisor developed by Dow Jones & Co.
Term
Ex-dividend
Definition
traded on/after ex-dividend date (dividend goes to seller, not buyer)
Term
Ex-dividend Date
Definition
on + after this date, stock sells ex-dividend (the seller retains the dividend and the buyer is not entitled to it); set @ 2nd biz day before dividend record date
Term
Floating-rate Preferreds
Definition
pay dividends in amts that fluctuate to reflect changes in interest rates (interest rates rise, dividend payments rise, vice versa)
Term
Foreign-pay Preferreds
Definition
preferreds w/ dividends + certain other features payable in/related to foreign funds
Term
Non-callable Preferreds
Definition
can't be called/redeemed as long as issuing comp in existence
Term
Open Order
Definition
type of order usually entered @ specified price to buy/sell security + held open until executed/cancelled
Term
Participating Preferred
Definition
have certain rights to a share in earnings fo comp over + above specified dividend rate
Term
Retained Earnings
Definition
whatever $ not paid out to shareholders in form of dividends; remains in comp
Term
Restricted Shares
Definition
shareholders given right to participate to unlimited degree in earnings of comp + assets on liquidation, but don't have full voting rights; 3 categories,  non-voting, subordinate voting, restricted voting
Term
Retractable Preferred
Definition
shareholder can force comp to buy back preferred on specified date(s) + @ specified price(s)
Term
Soft Retractable Preferred
Definition
retractables where redemption value may be paid in cash/in common shares (gen @ election of issuer)
Term
S&P/TSX Composite Index
Definition
measures changes in total market cap of stocks in Index (stock's weight w/in Index changes if price/# of shares outstanding changes)
Term
Split-share Preferreds
Definition
structured preferreds/equity dividend shares; based on underlying portfolio of common shares
Term
Stock Dividends
Definition
dividends in the form of add stock rather than cash
Term
Stock Split
Definition
used to bring high-priced stock into popular price range, say $10-20; more shares, less value per share
Term
Street Certificates
Definition
proof of ownership of stock; registered in name of securities firm rather than owner of shares; readily transferable to new owner
Term
Variable-rate Preferreds
Definition
pay dividends in amts that fluctuate to reflect changes in interest rates (interest rates rise, dividend payments rise, vice versa)
Term
Voting Rights
Definition
right to vote @ annual meeting + special/general meetings; elect directors who guide + control biz ops of corp; approval for sale, merger or liquidation of biz or amendment of charter
Term
All or None Order
Definition
trader must execute total # of shares specified on order before client will accept a fill
Term
Any Part Order
Definition
opposite of all or none order; client will accept all stock in odd, broken or board lots up to full amt of order
Term
Cash Account
Definition
clients expected to make full payment for purchases / full delivery for sales on/before settlement date
Term
Day Order
Definition
order to buy/sell that expires if not executed on day entered (all orders considered this unless otherwise specified)
Term
Good Through Order
Definition
order to buy/sell that is good for specified # of days + then auto cancelled if not filled by end of trading session on date specified in order
Term
Good till Cancelled Order
Definition
open order; order to buy/sell that remains n effect until is either executed/cancelled; many firms won't allow these + will insist on end date (after which order may be renewed)
Term
Limit Order
Definition
order to buy/sell securities @ specific price/better (order only to be executed if market reaches/betters that price)
Term
Long Position
Definition
represents actual ownership in security
Term
Margin
Definition
amt of funds investor must personally provide (margin + amt provided by member firm together make up total amt required to complete trans)
Term
Margin Account
Definition
for clients who wish to buy/sell securities on credit + initially pay only part of full price of trans (member firm lends remainder of trans price to client, charging interest on loan)
Term
Margin Agreement
Definition
document that must be signed by brokerage client who wishes to trade on margin
Term
Margin Call
Definition
demand for client to deposit money or eligible securities w/ broker to bring margin acct up to initial margin/min maintenance requirements
Term
Market Order
Definition
order to buy/sell specified # of securities @ best available market price; all orders not bearing specific price
Term
Professional (PRO) Order
Definition
order for account in which partner, director, officer, shareholder, IA ro other employee of member holds direct/indirect interest or arbitrage order; where order of client competes with non-client order @ same price, client's order given priority of execution over non-client order; labeled Pro, N-C, or Emp (employee)
Term
Registrar
Definition
person employed to keep record of owners of stocks + bonds issued by comp
Term
Settlement Date
Definition
T-bills, same day as trans; most debt securities maturing up to 3 years, 2 biz days after; all other securities, 3 biz days after
Term
Short Position
Definition
created when investor sells security he/she doesn't own
Term
Short Sale
Definition
sale of securities that seller doesn't own (tries to buy them back later @ lower price, making a profit)
Term
Stop Buy Order
Definition
order to buy security only after it has reached certain price; may be used to protect short position or ensure that stock is purchased while price rising (opposite of stop loss order)
Term
Stop Loss Order
Definition
order to sell security when price of 1 board lot declines to/falls below certain amt (limiting loss/protecting paper profit); become market orders when stop price reached (no assurance that will be filled, could decline further)
Term
Transfer Agent
Definition
bank/trust comp charged w/ keeping record of comp's stockholders + canceling / issuing certificates as shares bought/sold
Term
American-Style Option
Definition
options that can be exercised @ any time up to + including expiration date
Term
Assigned
Definition
what party holding short position is when party holding long position exercises the option
Term
At-the-money
Definition
price of underlying asset = strike price
Term
Call Option
Definition
option that gives owner right to buy underlying asset
Term
Canadian Derivatives Clearing Corporation (CDCC)
Definition
ole clearing corp for all ex-traded options + futures in Can
Term
Cash-secured Put Write
Definition
writing a put + setting aside amt of cash equal to strike price (if possible, should be invested in short-term liquid money market security to earn interest)
Term
Commodity Futures
Definition
contracts that have physical asset (gold, crude oil, soybeans) as underlying asset
Term
Covered Call
Definition
writers own underlying stock + will use position to meet obligations if assigned
Term
Cum Rights
Definition
btwn day of announcement that rights issued + ex rights date; anyone who buys stock entitled to receive rights if hold stock until @ least record date; rights can't be separated frm common stock
Term
Default Risk
Definition
risk that one of parties to derivative contract can't meet its obligation to other party
Term
Derivative
Definition
financial contract whose value is derived frm/dependent on value of some other asset (the derivative's underlying asset); can act as substitute for/offset to position in underlying asset; used to manage risk of existing/anticipated position in underlying asset + speculate on value of underlying asset; 2 types, options + forwards
Term
European-style Option
Definition
option that can only be excersied on expiration date
Term
Exchange-traded Funds (ETFs)
Definition
security that tracks an index + represents basket of stocks like an index mutual fund, but trades like a stock on an exchange
Term
Exercise
Definition
for owner of call options, involves buying underlying asset frm assigned writer @ price = strike price, owner of put options, involves selling
Term
Exercise Price
Definition
price at which the buyer of a call (put) option may choose to exercise his right to purchase (sell) the underlying futures contract
Term
Expiration Date
Definition
both parties must fulfill obligations/exercise rights under contract on/before this date, after, contract is auto terminated
Term
Ex-rights
Definition
anyone buying shares on/after ex-rights date not entitled to receive rights frm comp; rights can be separated frm common stock
Term
Financial Futures
Definition
contracts that have a financial asset (stock, bond, currency, interest rate, index) as underlying asset
Term
Forward
Definition
contracts btwn buyer + seller but unlike options, both parties obligate themselves to trade underlying asset in future @ price agreed on today
Term
Forward Agreement
Definition
when forward traded OTC
Term
Futures Contract
Definition
when forward is traded on exchange
Term
Good-faith Deposit:
Definition
gives party on other side of trans higher level of assurance that terms of forward will be honoured
Term
Hedging
Definition
attempt to eliminate/reduce risk of holding asset for future sale/anticipating future purchase of asset; involves taking position in derivative w/ payoff opposite to that of asset to be hedged
Term
In-the-money
Definition
call option - when price of underlying asset higher than strike price (holder can buy asset @ strike price then sell @ higher market price); put option - price of underlying asset lower than strike price (holder can sell asset @ strike price then cover short position @ lower market price)
Term
Intrinsic Value
Definition
in-the-money portion of call/put option; of rights during ex-rights period = (market price of stock - exercise/subscription price of rights) / # of rights needed to buy 1 share, during cum-rights period = (market price - exercise/subscription price) / (# of rights needed + 1); amt by which market price of underlying common stock exceeds exercise price of warrant
Term
Long-Term Equity AnticiPation Securities (LEAPS)
Definition
long-term option contracts (expiration date far in future)
Term
Marked-to-market
Definition
daily settlement of gains and losses on futures market
Term
Naked Call
Definition
don't own underlying stock (if assigned, underlying stock must first be pruchased in market before sold to call option buyer)
Term
Offering Price
Definition
fee paid from buyer to seller to obtain right buy/sell underlying asset
Term
Offsetting Transaction
Definition
liquidating position before expiration by cancelling it (offsetting long pos = selling same type + # of contracts, opposite for short pos)
Term
Open Interest
Definition
total # of contracts in series that are currently outstanding + haven't been closed out/exercised
Term
Opening Transaction
Definition
when an investor est new position in option contract
Term
Option
Definition
contracts btwn 2 parties, buyer + seller; buyer has right to buy/sell specified quantity of underlying asset in future @ price agreed on today + seller has obligation to complete trans
Term
Option Premium
Definition
fee paid from buyer to seller to obtain right buy/sell underlying asset
Term
Out-of-the-money
Definition
call option - price of underlying asset lower than strike price, put option - price of underlying asset higher than strike price
Term
Performance Bond
Definition
gives party on other side of trans higher level of assurance that terms of forward will be honoured
Term
Premium
Definition
price paid by holder to writer to obtain right to buy/sell; current price x 100 shares x # of contracts
Term
Put Option
Definition
option that gives owner right to sell underlying asset
Term
Record Date
Definition
to determine list of shareholders who will receive rights (like w/ dividends)
Term
Right
Definition
privilege granted to shareholder to acquire add shares directly frm issuing comp; short expiration date
Term
Strike Price
Definition
price @ which buyer of call (put) option may choose to exercise right to purchase (sell) underlying futures contract
Term
Subscription Price
Definition
exercise price of a right; usually lower than market price of shares @ time right issued
Term
Swap
Definition
OTC forward agreement involving series of cash flows exchanged btwn 2 parties on specified future dates
Term
Sweetener
Definition
usually warrants - help make debt/preferred share issues more attractive to buyers by giving them op to participate in appreciation of issuer's common shares
Term
Time Value
Definition
amt that option trading above intrinsic value; option price - intrinsic value; value of uncertainty - greater the uncertainty about where option will be @ expiration, greater option's time value (further away frm expiration date, greater value)
Term
Trading Unit
Definition
describes size/amt of the underlying asset represented by 1 option contract
Term
Underlying Asset
Definition
underlying interest; underlying security; what derivative dependent on; can be financial asset (stock/bond), currency, interest rate, equity index, real asset/commodity (crude oil, gold, wheat)
Term
Warrant
Definition
security that gives holder right to buy shares in comp frm issuer @ set price for set period of time; different frm call option in that issued by comp itself, not by other investors
Term
After-market Stabilization
Definition
dealer required to support offer price of stock once it begins trading in sec market; issuing comp + dealer negotiate terms as part of underwriting contract; 3 types
Term
Agency Deals
Definition
long form prospectus offering - dealer expected to sell issue by didn't guarantee it
Term
Authorized Shares
Definition
max # of common/preferred shares that corp may issue under term of its charter
Term
Banker's Acceptances
Definition
form of financing used in import/export transactions
Term
Banking Group
Definition
buys bonds from Financing Group + includes Financing group dealers; group of investment dealers, each of which individually assumes financial responsibility for part of underwriting of new issue of securities for a corp
Term
Best Efforts Underwriting
Definition
long form prospectus offering - dealer expected to sell issue by didn't guarantee it
Term
Blue Sky
Definition
once approval of final prospectus granted (issue may be distrib to investing public)
Term
Bought Deal
Definition
investment dealer negotiates w/ issuer directly + bids for specific new issue of securities; dealer assumes risk of position (acts as principal); details of price + type of issue decided simultaneously w/ filing short form prospectus/shortly after; spread btwn dealer's cost + final selling price may be as low as 1c of issue price (well below trad financing spreads); sold by investment dealer once final reg approval received, either as private or public (under short form prospectus); distrib not as wide
Term
Broker of Record
Definition
licensed broker who has been designated by the policyholder to represent that policyholder; dealer may become this once relationship btwn dealer + corp solidified; may have right of first refusal on new financing planned by corp
Term
Capital Pool Company (CPC)
Definition
developed by TSX Venture; vehicle to provide bizs w/ op to obtain financing earlier in development than might be possible w/ regular IPO; 2-stage process, first involves filing + clearing of CPC prospectus (completion of IPO + listing of CPC's common shares on Venture Ex), second involves id of biz/asset that can be acquired as Qualifying Trans (QT), prep + filing w/ Venture Ex of comprehensive CPC info circular containing prospectus-level disclosure of QT, holding of shareholder's meeting to get approval to close QT; issuer must raise btwn $200,000 + $1,900,000 in IPO (price can range frm 15c - 30c a share)
Term
Capital Stock
Definition
$ invested in biz by owners, stockholders /others who share in profits (different from debt capital)
Term
Commercial Paper
Definition
debt instruments issued by comps to meet short-term financing needs
Term
Competitive Tender
Definition
Can govt brings new issues of fixed-coupon marketable bonds + t-ills to market on regularly scheduled basis through this; securities issued by way of auction, whereby amt won @ auction based on bids submitted; bids submitted by 12:30 PM on date of auction, may consist of up to 7 bids stated in multiples of $1000 + subject to min size per individual bid of $100,000; bids state yield each bidder hopes to earn, not price for bond; all parties have bidding limits
Term
Continuous Disclosure
Definition
sets out the obligations of reporting issuers (other than investment funds) for financial statems, management's discussion + analysis (MD&A), annual information forms (AIFs), biz acquisition reports (BARs), material change reporting, info circulars, proxies and proxy solicitation, restricted share disclosure, + certain other cont disclosure-related matters
Term
Corporation
Definition
distinct legal entity separate frm people who own its shares; pays taxes + can sue/be sued in court of law; property acquired doesn't belong to shareholders of corp but to corp itself; shareholders have no liability for debts of corp + there's no add levy on shareholders if debts of bankrupt corp exceed value of realizable assets; able to raise funds by issuing equity/debt (more suitable for large biz ventures)
Term
Covenants
Definition
safeguards placed in issue's contract w/ purchaser to quard against any further weakening in position of security holder if issuer's financial position weakens
Term
Delayed Opening
Definition
shortly before opening of trading, ex can order trading in a security to be delayed if there is heavy influx of buy/sell orders for that security (delay gives ex traders time to sort out orders + match up buys w/ sells to allow fair + orderly trading when order removed); doesn't affect trading in other listed securities
Term
Delisting
Definition
permanent cancellation of listing privileges; reasons could incl delisted security no longer exists, having been called for redemption or substituted for other seucirty as result of merger, comp w/o assets or bankrupt, pub distrib of security dwindled to unacceptably low level, comp failed to comply w/ terms of listing agreement
Term
Direct Bond
Definition
one that is issued in prov govt's name
Term
Director
Definition
individual elected by corp shareholders to serve on that corporation's Board of Directors
Term
Due Dilligence Report
Definition
study of corp + industry w/in which corp ops, incl position of corp w/in industry, financial record + structure of corp, future prospects + risk factors associated w/ industry + comp
Term
Equity Capital
Definition
$ invested in biz by owners, stockholders /others who share in profits (different from debt capital)
Term
Escrowed Shares
Definition
serve as payment for properties, goods/services; shares held by indy trustee in trust for its owner that can't be sold/transferred unless special approval given (shares can be released only w/ permission of appropriate authorities, like stock ex(s) or securities admins); ties value of shares held to what happens to property used to obtain shares; prevents owners frm selling shares before proper market can develop; maintain full voting + dividend privileges; release usually determined by formula designed not to disrupt market for comp's free shares, usually based on milestones being reached by comp
Term
Exchange Offering Prospectus
Definition
not a full prospectus
Term
Final Prospectus
Definition
prelim prospectus must be approved by securities commission + receipt given; must contain sufficient details on securities being offered for sale, so as to provide full, true + plain disclosure of all material facts abt securities proposed to be distrib; must contain all info that may have been omitted in prelim (offering price, proceeds to issuer, underwriting discount, other required info); must incl consent of experts (appraisers, engineers, auditors, lawyers) whose reports/opinions referred to in prospectus, certificates + undertakings relating to financing + distrib arrangements + other documents evidencing compliance w/ regulatory requirements
Term
Financing
Definition
process by which issuer (govt/comp) raises debt/equity cap either publicly or privately
Term
Fiscal Agent
Definition
accomplish underwriting for govt
Term
General Parternship
Definition
partners involved in day-to-day ops; personally liable for debts + obligations incurred
Term
Government Securities Distributor
Definition
Schedule I + Schedule II banks, investment dealers, foreign dealers active in distrib of govt securities
Term
Green Shoe Option
Definition
op granted to underwriter in pub offering giving the op, for period of 15 to 45 days (usually 30 days) after effective date, to purchase add securities from issuer (usually up to 15% of shares being sold) @ initial price
Term
Greensheet
Definition
info circular dealers may prepare for in-house use only; for sales reps, highlights salient features of new issue (pro + con) in order to successfully solicit interest to gen public
Term
Grey Market
Definition
market that develops for security prior to actual ex listing; unofficial OTC market comprised of dealers wishing to execute customer's orders as well as support issue until official listing of stock on recog ex
Term
Guaranteed Bond
Definition
obligation issued in name of crown corp but guaranteed by prov govt as to payment
Term
Halt in Trading
Definition
can be ordered/arranged @ any time to allow signif new to be reported + widely disseminated
Term
Information Circular
Definition
must accompany notice of shareholders' meeting + be sent to all shareholders; mjust contain details about proposed directors, directors' + officers' remuneration, interest of directors + officers in material transactions, appointment of auditors + particulards of other matters to be acted upon @ meeting
Term
Initial Public Offering (IPO)
Definition
first time comp offers stock to investing public
Term
Issued Shares
Definition
that part of authorized shares that have been issued by corp
Term
Limited Partnership
Definition
can't participate in daily biz activity + liability limited to partner's investment
Term
Listing Agreement
Definition
details specific regs + reporting requirements that comp must follow to keep listing in good standing
Term
Market Capitalization
Definition
total dollar value of comp based on current market price of issued + outstanding shares
Term
Market-out Clause
Definition
allows dealer to cancel issue if market conditions changed to pt where issue unsaleable
Term
Material Fact
Definition
any info that signif affects (or would reasonably be expected to have signif effect on) market price of securities being offered
Term
Negotiated Offering
Definition
firms' management negotiates w/ dealer on type of security, price, interst/valuation multiple, special features + protective provisions needed to market new issue successfully
Term
New Issue Distribution Service for Canada Bonds (NIDS)
Definition
how Bank of Can distributes bonds to primary distributors; service provided by CDN Depository for Securities
Term
NEX
Definition
new + separate board of TSX Venture Ex that provides trading forum for comps taht have fallen below Venture Ex's listing standards; provides trading forum for issuers that have been listed on TSX Venture but no longer meet Tier Maintenance Requirements (are Inactive Issuers), CPCs that have failed to complete QT in accordance w/ requirements of ex, TSX issuers that no longer meet cont listing requirements + would have been eligible for listing on TSX Venture as Inactive Issuers under existing policies
Term
No Par Value
Definition
don't have stated face value
Term
Non-competitive Tender
Definition
bid accepted in full by Bank of Can + bonds awarded @ auction average; bid ceiling = $3 million; allotted by Bank of Can @ average price of accepted competitive tenders; in multiples of $1000 w/ min of $1000
Term
Officer
Definition
appointed by directors; corp employees responsible for day-to-day ops of biz ;hold office until annual meeting following appointment / until removed by directors; chairman of the board, pres, executive vice-pres, vice-pres(s)
Term
Outstanding Shares
Definition
part of issued shares which remain outstanding + owned by shareholders of comp
Term
Over-allotment Option
Definition
op granted to underwriter in pub offering giving the op, for period of 15 to 45 days (usually 30 days) after effective date, to purchase add securities from issuer (usually up to 15% of shares being sold) @ initial price
Term
Override
Definition
add payment over + aboce original entitlement on entire issue in apyment for services as financial advisors + syndicate managers/leads
Term
Par Value
Definition
stated face value of share, most commonly expressed in terms of so many dollars/share; no fixed relationship btwn it + current market value
Term
Partnership
Definition
involves 2+ persons contributing to biz, whether be cap/expertise required to run enterprise; legislated under Partnership Act (2 forms of agreements, general + limited)
Term
Preliminary Prospectus
Definition
submitted to prov securities commissions for review when issuer + underwriters have agreed to basic terms + methods of issuing the new securities; required to display in red ink on front cover statement that is prelim; disclosure document required under prov securities laws + underwriters use it to solicit expressions of interest frm potential buyers of security; price + size of issue usually not stated bcs info not finalized until after issue has been marketed to investment community
Term
Primary Dealers
Definition
govt securities distributors that maintain certain threshold of activity
Term
Primary Offering
Definition
new issue of securities by issuer; gen takes place in IPO market; investment dealer uber important
Term
Private Offering
Definition
/placement; one/few large inst investors (banks, mutual fund comps, insurance comps, pension funds) solicited + entire issue sold to 1+ of them; since offered to sophisticated investors, usually no formal prospectus need be prepared (reduces cost of distrib); usually announced after have occurred
Term
Prospectus
Definition
provides detailed description of securities offered + of issuing corp (incl history, ops, management, risk + audited financial statems); basic principle governing = "full, true + plain disclosure of all material facts relating to securities offered"; more imp items = details of offering, what comp plans to do w/ proceeds frm issue, info on biz + affairs of issuer, factors affecting investment decision, info on promoters + principal security holders + interest of management in material transactions, financial info incl comp's share + loan cap structure + op results + debt etc.
Term
Protective Provisions
Definition
safeguards placed in issue's contract w/ purchaser to quard against any further weakening in position of security holder if issuer's financial position weakens
Term
Proxy
Definition
power of attorney given by shareholder that gives designated person authority to vote shareholder's stock @ shareholder's meeting
Term
Public Float
Definition
part of issued shares that are outstanding + available for trading by public + not held by comp officers, directors or insts that hold controlling interest in comp; exculdes those shares owned in large blocks by insts; smaller the float, more volatile the price of stock will be
Term
Quorum
Definition
%/proportion of voting shares required to be represented in person/by proxy to constitute a valid shareholders meeting
Term
Red Herring Prospectus
Definition
submitted to prov securities commissions for review when issuer + underwriters have agreed to basic terms + methods of issuing the new securities; required to display in red ink on front cover statement that is prelim; disclosure document required under prov securities laws + underwriters use it to solicit expressions of interest frm potential buyers of security; price + size of issue usually not stated bcs info not finalized until after issue has been marketed to investment community
Term
Reporting Issuer
Definition
has made pub distribs + is subject to cont disclosure requirements of annual financial + other required info
Term
Secondary Offering
Definition
public sale of comp's previously issued securities made after IPO; usually handled by investment dealer/syndicate (dealer purchases shares frm comp @ agreed price + resells them @ higher price to insts + public, making profit on spread); inc # shares out
Term
Selling Group
Definition
other dealers, normally members of the IDA, who aren't members of Banking Group; invited in writing by the Financing Group to buy bonds at discount + offer for more to clients (excluding exempt list); each member has liability for orders placed w/ Financing Group
Term
Shareholder
Definition
holder of 1+ shares (stock) in a corp
Term
Short Form Prospectus
Definition
may be used only by certain senior reporting issuers; works on theory that much of info that would be incl in full prospectus is already available + widely known bcs of cont disclosure; shortens time period + streamlines procedures by which qualified issuers can access CND securities markets through prospectus offerings; issuer allowed to use if it files electronically using SEDAR, is a reporting issuer in at least 1 CND jurisdiction, is up to date in filings in every CND jurisdiction in which is reporting issuer, has filed current annual financial statems + current AIF in at least 1 CND jurisdiction in which is reporting issuer, is not issuer whose ops have ceased or whose principal asset is cash, cash equivalents or ex listing, has equity securities listed + posted for trading/quoted on "short form eligible ex"; focuses on matters relating prim to securities being distrib (price, distrib spread, use of proceeds, securitie's attributes); inc by reference certain info contained in most recent AIF + cont disclosure documents of issuer + describes how members of public may obtain copies of these documents
Term
Short Position
Definition
when dealer syndicate initially sells securities in excess of original amt offered by issuer for sale to public (oversells the offering)
Term
Sole Proprietorship
Definition
involves 1 person running own biz + is taxed on earnings @ personal income tax rate; individual profits if venture successful + liable for all debts losses + obligations; not regulated to extent of other forms of biz org + proprietor free to make decisions, but resources limited for getting cap + expertise
Term
Statement of Material Facts
Definition
not a full prospectus
Term
Suspension of Trading
Definition
imposed if comp's financial condition doesn't meet ex's requirements for cont trading, if comp tails to comply w/ terms of listing agreement, or for some other good cause; if comp solves problem to ex's satisf w/in time required by exchange, trading in suspended security will resume; during suspension members usually allowed to execute orders for suspended security in OTC market except for those securities suspended frm trading on TSX Venture
Term
Syndicate
Definition
usually includes many major dealers, whose combined financial responsibility + distrib powers are more than adequate to underwrite + sell large issues required by prov govts
Term
Transparency
Definition
ex. stock exchange, everyone can see what's going on
Term
Tombstone Advertisement
Definition
appear in financial press as matter of record once deal completed; incl names of dealers in Financing Group
Term
Treasury Shares
Definition
comp may find it advantageous to repurchase some of outstanding shares; don't have voting rights/dividend entitlements, but comp does have op of reselling them back to market @ later date through secondary/treasury offering
Term
Trust Deed
Definition
formal document lays down terms of trust
Term
Trust Deed Restrictions
Definition
safeguards placed in issue's contract w/ purchaser to quard against any further weakening in position of security holder if issuer's financial position weakens
Term
Trustee
Definition
individual/bank managing assets of living trust
Term
Underwriting
Definition
process by which issuer (govt/comp) raises debt/equity cap either publicly or privately
Term
Voting Trust
Definition
through this, corp that is undergoing restructuring due to financial difficulties can be placed under control of a few individuals; usually put into effect for specific periods of time/until certain results achieved; used bcs financiers may be willing to inject new cap on if can be assured of control to protect their investment until there is recovery
Term
Waiting Period
Definition
75 days to prepare, submit + receive approval for final prospectus; only ltd communication w/ potential investors permitted
Term
Yield
Definition
ratio of coupon to current market price of debt instrument
Term
Accounts Payable
Definition
incl unpaid bills for raw materials, supplies, etc.
Term
Accounts Receivable
Definition
$ owing to comp for G&S has sold; allowance for doubtful accts often sub frm receivables (management's estimate of amt that won't be collected)
Term
Amortization
Definition
loss in value over period of years (on cap assets other than land); depreciation; writing off of intangible assets (patents, trademarks); based on original cost of each asset, life expectancy + probable salvage/scrap value when withdrawn frm service
Term
Asset
Definition
what comp owns + what owing to it (liabilities + shareholders' equity)
Term
Balance Sheet
Definition
shows a comp's financial pos @ specific date (annual reports, last day of fiscal year)
Term
Book Value
Definition
shareholders' equity, represents total value of comp's assets that shareholders would theoretically receive if comp were liquidated (doesn't nec indicate amt shareholders will receive for ownership interest in event of sale, that depends on comp's earning power + prospects)
Term
Canadian Public Accountability Board (CPAB)
Definition
joining of CSA, CICA + OSFI; primary role is to strengthen confidence in cap markets + credibility of financial statems in gen; ensures increased indy of auditors + increased transparency of auditing process; review major accting firms annually
Term
Capital Cost Allowance
Definition
income tax equiv of amort + allows for larger deductions during early years of asset's life
Term
Capitalize
Definition
ecording of expenditure as asset rather than expense to allow for spreading of expense over more than 1 accting period; 2 most common types of items = leases + interest
Term
Contributed Surplus
Definition
belongs to shareholders but originates frm sources other than earnings; any excess received when shares issued over par/stated value
Term
Cost Method
Definition
to derive equity income in owners' section of earnings statem; primarily used for ownership holdings that don't result in signif influence existing (trad ownership of <20%) + where investments in other comps reported simply as investments on financial statems
Term
Cost of Goods Sold
Definition
incl costs of labour, raw materials, fuel + power, supplies + services and other kinds of expenses which go directly into cost of manufacturing/cost of goods purchased for resale
Term
Current Asset
Definition
cash + assets which can be turned into cash right away or which in normal course of biz will be turned into cash in near future (normally w/in 1 year); largely determine firm's ability to pay day-to-day op expenses; usually listed in order of liquidity (cash, temp investments, accts receivables, prepaid expenses, inventories); cash + accts receivable + inventory + prepaid expenses
Term
Current Liabilities
Definition
debts incurred by comp in ordinary course of biz which have to be paid w/in short time (year @ most); 5 common types - bank advances, accts payable, dividends payable, income taxes payable, first mort bonds due w/in 1 year; also, other obligations that must be met w/in year incl, like outstanding wages + salaries, bank + bond interest, legal fees, pension payments, and property + excise taxes
Term
Declining-balance Method
Definition
method used to calc amortization; applies fixed % (usually double straight-line rate) rather than fixed $ amt, to outstanding balance to determine expense to be charged in each period - amt deducted frm cap asset balance to determine amt against which % will be applied in subsequent period
Term
Deferred Charge
Definition
other type asset; represent payments made by comp for which benefit will extend to comp over period of years; similar to prepaid expenses except benefits received extend for longer period
Term
Deferred Revenue
Definition
results when comp receives payment for G&S that it hasn't yet provided; unearned portion of revenue represents liability to comp + shown as such
Term
Depletion
Definition
similar to amort + usually used by mining, oil, natural gas, timber comps + other extractive industries; since industries consist largely of nat wealth (resources) as assets developed + sold, comp loses part of assets w/ each sale - wasting assets; comp must recover not only cost of extraction but original cost of acquiring these natural resources before profit can be recognized
Term
Earnings Before Interest and Taxes (EBIT)
Definition
total of op profit + non-op income
Term
Earnings Statement
Definition
ncome Statem, Profit + Loss Statem, Statem of Revenue + Expenses, shows how much revenue comp received during year frm sale of products/services + expenses comp incurred for wages, materials, op costs, taxes + other expense items (difference = comp's profit/loss for year); 10-30 items grouped into 4 broad sections - operating, non-operating, creditors', owners'
Term
Equity Income
Definition
equity earnings, earnings frm entity subject to signif influence, earnings frm long-term investments; earned when comp reports share of entity subject to signif influence earnings; derived using equity accting method, cost method, and consolidated method
Term
Extraordinary Item
Definition
"windfall-type" cap gain through expropriation, or loss resulting frm flood, earthquake, revolution, etc.
Term
FIFO (first-in-first-out)
Definition
items acquired earliest assumed to be used/sold first (most common in Can)
Term
Future Icome Taxes
Definition
occur when taxes reported on comp's earnings statem are different frm taxes reported on tax return (difference is bcs taxes on earnings statems calc according to CND Institute of Chartered Accountants (CICA) guidelines, and taxes paid based on tax returns filed under fed/prov Income Tax Acts + Regulations)
Term
Generally Accepted Accounting Principles (GAAP)
Definition
financial statems based on this; principles + practices to be used for recording + reporting biz trans issued by CND Institute of Chartered Acctants (CICA); bcs of difference in op environments for comps in different industries, GAP does allow some flexibility for comps to choose among accting standards
Term
Goodwill
Definition
probability that regular customer will cont to return to do biz, also amt that purchaser of comp will pay for good management of comp
Term
Intangible Asset
Definition
assets that can't be touched, weighed, measured; not available for payment of debts of biz + usually decline greatly in value in event of liquidation; ex goodwill, patents, copyrights, franchises, trademarks
Term
Inventory
Definition
goods + supplies that comp keeps in stock (raw materials + finished goods); valued @ original cost/ current market value (whichever lower); original cost determined through average cost, first-in-first-out or last-in-first-out
Term
Liabilities
Definition
what comp owes; opposite of asset; total liabilitie = accts payable + current portion of long-term debt + long-term debt + minority interest
Term
LIFO (last-in-first-out)
Definition
items acquired most recently assumed to be used/sold first (good for accting but not income tax in Can)
Term
Net Book Value
Definition
net carrying amt; value of cap assets (property, plant + equip) recorded on balance sheet after deduction of amortization
Term
Retained Earnings
Definition
portion of annual earnings retained by comp after payment of all expenses + distrib of dividends; reinvested in biz; serve as cushion to absorb losses incurred in bad years
Term
Share Capital
Definition
amt received by comp for shares @ time issued (not related in any way to current market price of outstanding shares); doesn't change frm year to year unless comp issues new shares/bought back outstanding ones; any excess received over par/stated value shown in "contributed surplus"
Term
Shareholder's Equity
Definition
represents shareholders' interest in comp + excess of comp's assets over liabilities
Term
Straight-line Method
Definition
method used to calc amortization; equal amt charged each period
Term
Net Operating Profit
Definition
operating revenue - costs of goods sold - selling and admin expenses - amort
Term
Non-op Section
Definition
income earned frm sources other than main ops
Term
Net Income
Definition
net op profit + interest income + equity income - current and future income taxes - extraordinary loss
Supporting users have an ad free experience!