Back-end load:

A sales charge levied when a mutual fund units are redeemed.

Back Office:

The administrative department of a brokerage house.

Balance Sheet:

One of the financial statements that appears in a Company's Annual Report Its divided into three major parts: Assets (see assets), Liabilities which include debts, taxes owing and Shareholders Equity (see equity).

Balloon (Payment) Mortgage:

Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.

Bank Act:

Federal legislation governing how banks operate in Canada. The Bank Act was first passed in Canada in 1871 and is updated periodically -usually every 10 years. Trust and Loan companies are also legislated by both the Federal and Provincial governments.

Bank Card:

A card issued by a financial institution that identifies the holder as a customer of the institution and allows access to accounts through an ABM: also, a credit or debit card issued by a financial institution.

Bank of International Settlements (BIS):

The BIS is an international body that promotes the co-operation of central banks, fulfills the function of a central bank's bank and acts as a clearing and settlement agent. It acts as a forum for discussion of international monetary policy and conducts research into international banking developments.

Bank Rate:

The rate of interest charged by the Bank of Canada to the chartered banks on loans made to the chartered banks. Such loans are usually only made when the banks are short of funds and cannot readily borrow them from anyone other than the Bank of Canada.

Bank Reserves:

Currency held by the chartered banks and deposits made by them with the Bank of Canada or invested in a specified manner. Reserves must, by regulation, be at least as high as a specified percentage of the total chequing, savings, and other deposit held by the banks. Funds in excess of these reserves are loaned out or invested by the banks.

Banker's Acceptance (B.A):

A draft of bill of exchange accepted by a bank or trust company, the accepting institution guarantees payment on the bill.

Base Rent:

see Net Rent.

Basis Point:

1/100th of 1% in yield; hence 50 basis points is 1/2 of 1%.

Basis Price:

A price expressed in terms of yields to maturity or annual rate of return.

Beacon Score:

A beacon score is numerical rating from around 400 up to 850. 700 or better and you can buy anything you like. 600 or less and you will have troubles getting a loan. These scores reflect your re-payment habits, number of credit items, length of time you have had a credit item, number of times someone has accessed your credit.

Bear/Bull Markets:

A declining market or a period of pessimism when declines in the market are anticipated (a way to remember bear down).

- Bears: are investors who believe interest rates are more likely to go up than down. If right the price of existing fixed-income securities such as bonds will go down.

- Bulls: are investors who believe interest rates are more likely to go down than up. If right the price of existing fixed-income securities such as bonds will go up down.

Bearer Security:

A security whose owner is not registered on the books of the issuer. A bearer security is payable to the holder.

Bearish:

An attitude or indication implying that prices are likely to experience a substantial decline.

Bellwether Security:

A particular security that is felt to be representative of the market in which it trades. Hence, movements by a bellwether are taken as an indication of the overall direction of the market.

Benchmark:

A benchmark represents the return of a passive investment strategy for a particular asset class.

Beneficiary:

One who is to receive the benefits of any type of contract.

Bequest:

A disposition of personal property by will.

Best-Earnings Plan:

A defined-benefit plan that calculating a recipient's retirement benefit based on the best-earnings of the employee career, usually over a three or five year period.

Beta:

A statistical term used to illustrate the relationship of the price of an individual security or mutual fund unit to similar securities or financial market indexes.

Bid and Asked Prices:

A bid is the price someone is willing to pay for a security; an asked price is the price at which someone is willing to sell the security. A bid is lower than an asked, or else the security would be traded at a mutually agreeable price.

Binding Agreement (Insurance):

A form of buy-sell agreement. a binding agreement is the most effective means of guaranteeing a fair price from the point of view of the deceased family or the disabled shareholder. The compulsory purchase of the deceased or selling shareholder's interest by the remaining shareholders protects the surviving or remaining shareholders in that no other parties can become involved in the business without their consent.

Blanket Mortgage:

A mortgage covering at least two pieces of real estate as security for the same mortgage.

Blue Chip:

A descriptive term usually applied to high grade equity securities.

Blue Sky:

To conceptualize freely.

Board Lot:

A standard number of shares for trading transactions. The number of shares in a board lot varies with the price level of the security. Although in most cases a board lot is 100 shares.

Board of Directors:

A committee elected by the shareholders of a company, empowered to act on their behalf in the management of company affairs. Directors are normally elected each year at annual meetings.

Boiler Room:

A term used to describe a firm using telephone salespeople to peddle securities of lesser quality or penny stocks.

Bond:

A legal document representing a debt owed by the bond's issuer to the purchaser. Such debts usually have a stated term before the issuer repays the holder, pay interest to the holder at a rate that is fixed when the bond is first issued, and are secured by a pledge on some of the issuer's assets.

Long-term bonds: A bond or debenture maturing in more than 10 years.

Medium-Term Bond: A bond or debenture matures in 3 to 10 years.

Bond Types:

We have defined the following types of bonds separately, they are shown below as Callable, Convertible, Extendable and Retractable, Foreign-pay bonds, Sinking fund bonds, Real return bonds and Zero coupon.

Bonds (Callable):

Callable bonds also known as redeemable bonds, they give the issuer the right to pay off - or call - the outstanding debt after a specified date. This allows the corporation to retire high-interest debt when rates drop and borrow elsewhere. Investors are often paid a premium when bonds are called in recognition of the fact they are being deprived of future income.

Bonds (Convertible):

Bonds that can be exchanged for a company's common shares. Convertible bonds combine the security of bonds with the opportunely to make gains from the appreciation of common stock.

Bonds (Extend/Retract):

An extendable bond gives the holder the right to exchange the bond for a longer-term bond at the same or a higher rate of interest. A retractable bond allows the investor to redeem the bond at par earlier than the original term, For example, a 10-year could be redeemed in 5 years.

Bonds (Foreign-pay):

Some bonds issued by Canadian institutions are denominated is foreign currencies. Foreign-pay bonds are used to raise money in international markets. For example, bonds denominated in yen will appeal to Japanese investors, and those in U.S. funds will appeal to Americans - or they may be bought by Canadians investors seeking exposure to foreign currencies.

Bonds (sinking fund bonds):

A sinking fund is a sum of money set aside, usually annually, by the issuer of a bond or debenture to be used to repay all or part of the debt by maturity. This provides added security for investors; consequently the yields on sinking fund bonds may be lower than those for other bonds. Redeemable bonds often have sinking fund provisions.

Bonds (Real return):

The federal government issues 30-year bonds with interest rates that are adjusted to account for inflation. The base rate is (say) 4.50% and the return is adjusted according to a formula on consumer price index.

Bonds (Zero-coupon):

Issued without interest coupons. They are sold at a discount to face value, with the difference between the selling price and the face value representing the investor's return.

Bonds (With Warrants)

A bond may be issued with a warrant attached. This gives the investor the right to buy a company's shares within a certain time at an attractive price.

Bond Indenture:

A legal document that outlines the agreement between and restrictions on the actions of a lender, or set of lenders, and a borrower in a bond issue.

Bond Rating Agencies:

Agencies that evaluate the credit of a bond issuers and rates them accordingly. Ratings refer to the level of default risk associated with the bond. Higher ratings mean there is less chance that the issuer will default on the bond payments. Explanation of a typical bond ratings

SECURE

A++ and A+ (Superior): Assigned to companies which have demonstrated superior overall performance when compared to the standard established by the rating company. A++ and A+ rated companies have a very strong ability to meet their obligations to shareholders/Bond holders/ Policyholders over a long period of time.

A and A- (Excellent): Assigned to companies which have demonstrated excellent overall performance when compared to the standard established by the rating company.

B++ and B+ (Very Good): Assigned to companies which have demonstrated very good overall performance when compared to the standard established by the rating company.

VULNERABLE: you start to get the picture after reading the above!
B and B - (Adequate)
C++ and C+ (Fair)
C and C- (Marginal)
D (Very Vulnerable)
E (Under Provincial or State Supervision)
F (in liquidation)

Bond Swap Strategy:

A strategy that sells long-bonds and buys short-bonds during periods of rising interest rates. It also does the opposite during periods of falling interest rates.

Bond Yield:

The return on a bond, based partly on the income received over the term of the bond, and partly on the principal repayments.

Book debts:

A term used in banking for trade debts or receivable normally assigned to a bank as security for a operating line of credit.

Bottom-up:

A management style that de-emphasizes the significance of economic and market cycles and focuses on the analysis of individual stocks. (See top-down)

Break-up value:

The estimated value of a business +/- after its divisions have separated,and liabilities paid off.

British Clearers:

The large clearing banks that dominate deposit taking and short-term lending in the domestic sterling market in Great Britain.

Broker:

A broker is a financial middleman who matches investors who wish to purchase a particular investment with those who wish to sell it. For this service, the broker charges a fee or commission that is usually related to the amount of money involved in the transaction.

Budget:

Allotment of money and or time.

Brokerage House:

A company that employs individuals who act as brokers.

Building Class (Real Estate):

Typically real estate companies assign each office building a qualitative rating of Class 'A', 'B', or 'C'. The class ratings reflect an evaluation of the following characteristics: Age , Location, Design, Size , Building maintenance, Building systems, Amenities and or Access

It is important to understand that the grading are both relative and subjective. They are also subject to change with time or substantial improvements. Generally speaking, however, the following statements can be made:

Class A buildings are considered to be above average in most or all of the rating criteria outlined above. Class B buildings may score very well in some criteria, but are only adequate in others. Class C buildings may offer average benefit according to some of the criteria, but are below average or completely lack other elements.

Business Cycle:

The continuous ebb and flow of economic activity.

Business Taxes (Real Estate):

Collected by municipalities directly from tenant. Depending on the nature of the business category firms pay the appropriate percentage of the realty tax as a business tax.

Buy-and-Hold Strategy:

Assets are purchased in a portfolio and held until maturity or until the investor's investment horizon is reached.

Buy-Sell Agreement:

An agreement between shareholders or business partners to purchase each others' shares in specified circumstances.

Buyback:

The purchase by a company of its own securities.

Bull Market:

A slang expression meaning an extended period of time during which the general price level of a market rose.

Any metal in mass, gold and silver.

Bullion:

Precious metal in negotiable form; in most marketplaces a purity of .995 or finer is required. Bullion is produced in the form of bars, wafers or ingots.

Bullish:

The attitude of someone who is anticipating a bull market, or the description of an event that is supposed to cause market prices to rise.

Buy-Down (Real Estate):

When the lender and/or the home builder subsidize the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.

Buying on Margin:

Purchasing a security partly with borrowed money.

This Glossary of financial terms was created by Fiscal Agents Financial Information Services, Research Department. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, mechanical, electronic, photocopying, recording, or otherwise, without the prior written permission of Fiscal Agents. Copyright Fiscal Agents © 2000. All Worldwide Rights Reserved. See Notes and Credits or see permissions page.