Back-end
load:
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A sales charge levied when a mutual fund units are redeemed.
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Back
Office:
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The
administrative department of a brokerage house.
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Balance
Sheet:
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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).
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Balloon
(Payment) Mortgage:
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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.
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Bank
Act:
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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.
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Bank
Card:
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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.
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Bank
of International Settlements (BIS):
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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.
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Bank
Rate:
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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.
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Bank
Reserves:
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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.
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Banker's
Acceptance (B.A):
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A
draft of bill of exchange accepted by a bank or trust company,
the accepting institution guarantees payment on the bill.
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Base
Rent:
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see
Net Rent.
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Basis
Point:
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1/100th of 1% in yield; hence 50 basis points is 1/2 of 1%.
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Basis
Price:
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A
price expressed in terms of yields to maturity or annual rate
of return.
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Beacon
Score:
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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.
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Bean
Counter: |
An
Accountant. |
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Bear/Bull
Markets:
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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.
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Bearer
Security:
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A
security whose owner is not registered on the books of the
issuer. A bearer security is payable to the holder.
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Bearish:
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An
attitude or indication implying that prices are likely to
experience a substantial decline.
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Bellwether
Security:
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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.
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Benchmark:
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A benchmark represents the return of a passive investment
strategy for a particular asset class.
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Beneficiary:
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One who is to receive the benefits of any type of contract.
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Bequest:
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A
disposition of personal property by will.
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Best-Earnings
Plan:
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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.
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Beta:
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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.
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Bid
and Asked Prices:
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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.
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Binding
Agreement (Insurance):
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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.
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Blanket
Mortgage:
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A
mortgage covering at least two pieces of real estate as security
for the same mortgage.
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Blue
Chip:
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A descriptive term usually applied to high grade equity securities.
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Blue
Sky:
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To
conceptualize freely.
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Board
Lot:
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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.
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Board
of Directors:
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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.
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Boiler
Room:
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A
term used to describe a firm using telephone salespeople to
peddle securities of lesser quality or penny stocks.
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Bond:
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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.
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Bond
Types:
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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.
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Bonds
(Callable):
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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.
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Bonds
(Convertible):
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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.
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Bonds
(Extend/Retract):
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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.
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Bonds
(Foreign-pay):
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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.
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Bonds
(sinking fund bonds):
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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.
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Bonds
(Real return):
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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.
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Bonds
(Zero-coupon):
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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.
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Bonds
(With Warrants)
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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.
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Bond
Indenture:
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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.
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Bond
Rating Agencies:
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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)
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Bond
Swap Strategy:
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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.
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Bond
Yield:
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The
return on a bond, based partly on the income received over
the term of the bond, and partly on the principal repayments.
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Book
debts:
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A
term used in banking for trade debts or receivable normally
assigned to a bank as security for a operating line of credit.
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Book
Value: |
The
supposed value that belongs to a company's owners or shareholders
after total liabilities have been subtracted from total assets.
Also called shareholders' equity. |
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Bottom
line: |
a
term referring to the profit/earning of a company. |
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Bottom-up:
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A
management style that de-emphasizes the significance of economic
and market cycles and focuses on the analysis of individual
stocks. (See top-down)
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Breakeven
point: |
When
the sale price of an item is equal to is accumulated acquisition
cost. |
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Break-up
value:
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The
estimated value of a business +/- after its divisions have
separated,and liabilities paid off.
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Bridge
Financing: |
Interim
financing of sort or another. |
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British
Clearers:
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The
large clearing banks that dominate deposit taking and short-term
lending in the domestic sterling market in Great Britain.
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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.
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Budget:
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Allotment of money and or time.
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Brokerage
House:
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A company that employs individuals who act as brokers.
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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.
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Business
Cycle:
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The
continuous ebb and flow of economic activity.
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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.
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Buy-and-Hold
Strategy:
|
Assets are purchased in a portfolio and held until maturity
or until the investor's investment horizon is reached.
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Buy-Sell
Agreement:
|
An
agreement between shareholders or business partners to purchase
each others' shares in specified circumstances.
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Buyback:
|
The
purchase by a company of its own securities.
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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.
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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.
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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.
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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.
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Buying
on Margin:
|
Purchasing
a security partly with borrowed money.
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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.
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