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Specialized Glossaries:

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Abbreviations / Acronyms

Definitions – C
3 C's Lenders look for an ability to repay debt and a willingness to do so, and sometimes for a little extra security to protect their loans. They speak of the three C's of credit: capacity, character, and collateral.


Preferred shares or bonds that give the issuing corporation an option to repurchase, or "call" those securities at a stated price. These are also known as redeemable securities.

Call Money:

Interest bearing band deposits that can be withdrawn on 24 hours notice.

Call Money rate:

The average rate of interest charged on call money.

Call Option:

The owner of a call option has the privilege for a specified period of time of buying a particular investment security at a pre-arranged price from the person who first sold the option.

Canada Bonds:

Long-term debentures issued by the Government of Canada.


Canada Mortgage and Housing Corporation (CMHC):

The federal Crown corporation which administers the National Housing Act. CMHC services include providing housing information and assistance to consumers and insuring home purchase loans for lenders. The company acts as guarantor of qualified mortgages of both a commercial and residential nature.


Canada Pension Plan (CPP):

The Canada Pension Plan is a government program providing retirement, death and disability benefits for Canadians. Along with OAS, it makes up one leg of the retirement planning stool. Working individuals make contributions (2.7% of pay between $3,400 and $34,900 in 1995) which are matched by employers. In turn at retirement recipients receive a benefit of 25% of average monthly pensionable earnings adjusted for increases in the YMPE.

CPP contribution rates are scheduled to double over the next 20 years. There is uncertainty as to whether those employed will be willing to pay these high contribution rates. The future of CPP benefits may be in jeopardy.


Canada Savings Bond:

A bond issued annually by the government of Canada. It defers from other Canadian government bonds in that it can be purchased by individuals. The bond can be cashed for its face amount (plus interest, if any) at any time.


Canadian Bankers Association:

Professional industry association that provides information, research, advocacy, education and operational support services primarily to the banking industry.


Canadian Depository for Securities Ltd.:

Agency responsible for the automatic processing and clearing of securities transactions in Canada.

Canada Deposit Insurance Corp (CDIC): CDIC is a Government Agency that provide Deposit Insurance through member financial institutions. e.g. Banks, Trust and Loan Corporations.

Canadian Securities Administrators (CSA):

Securities regulators oversee Canada's capital markets and advisers who sell and manage investments traded in those markets. They strive to protect investors from unfair, improper and fraudulent practices while fostering a fair and efficient marketplace. The Canadian Securities Administrators (CSA) is comprised of the 13 provincial and territorial securities regulators. For more information about the CSA please check its website at


Canadian Payments Association (CPA):

This association, which is composed of several financial institution and the Bank of Canada, operates a national clearing system fir financial-institution payments.

Capacity (3 Cs). Can you repay the debt? Lenders ask for employment information: your occupation, how long you've worked, and how much you earn. They also want to know your expenses: how many dependents you have, whether you pay alimony or child support, and the amount of your other obligations.

Capacity Utilization Rate:

The percentage of total available industrial capacity in the economy (plants and equipment) being used to produce goods.


In an investment context, the term usually means the financial assets that an investor owns, especially cash. In an economic context, the term usually means the machinery, buildings, equipment, and inventory a company uses to produce its goods.

Capital Cost Allowance:

A taxation term. Equivalent to depreciation, that makes allowance for the wearing away of a fixed asset.

Capital Gain:

A type of profit derived by selling an asset at a higher price than that at which it was purchased. One-half of the amount is taxable as income when received.

Capital Loss:

The loss that results when a capital asset is sold for less than its purchase price.

Capital Markets:

A general term that encompasses all the various markets for financial investments.

Capital Ratio:

The percentage of total risk-adjusted assets supported by a capital base as defined by a financial institution. This type of risk weighting approach is based on a model developed by the Bank of International Settlements (BIS).

Capital Structure: Various types of debt and equity capital maintained by a company. A company is considered to be more leveraged when it has more debt capital than equity.

Capital Stock:

All ownership shares of a company, both common and preferred.


The total amount of all securities, including long-term debt, common and preferred stock, issued by a company.

Career-Average Plan:

A defined-benefit plan that bases a recipient's retirement benefit on the average earnings during an employee's career.

Cash Cow:

A division or subsidiary that makes large profits and requires little future investment.

Cash Equivalent:

Assets that can be quickly converted to cash. These include receivables. Treasury bills, short-term commercial paper and short-term municipal and corporate bonds and notes.

Cash Flow (Real Estate):

The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.).

Cash Flow Deficiency:

More money being spent than earned.

Cash Market:

Also called the spot market. Purchase of goods for delivery on the spot. Commodities in these markets are the underling assets for derivative markets.

Cash Price:

Also called "spot price". The price required for immediate settlement. The term cash or spot is used to differentiate from a futures transaction, where settlement is due at a predetermined tome in the future.

Cash Settlement:

In the money market a transaction is said to be made for cash settlement if the securities purchased are delivered against payment.

Cash Surrender Value:

The amount of cash a person may obtain by voluntarily surrendering a life insurance policy.

Cash Turnover: The number of times a profit is made using the same $ within a year.

Cash-Value Life Insurance:

Combines basic life insurance protection with tax-deferred investing. The larger portion of your annual premium pays for insurance, while a smaller amount goes into the policy's investment or cash-value account. Your investment earnings accumulate free of taxes until you withdraw them, it may takes over 10 years or more for the tax-deferral benefits to overcome the drag of the commissions charged by insurers.

Cashable Guaranteed Investment Certificates:

A type of debt security sold to individuals by banks and trust companies. Are designed to be cashed before the specified redemption date, and pay interest at a fixed rate. The rate is normally lower than non-Cashable GICs.

Ceiling Price:

A maximum allowable price regulated by government.

Central Bank:

The agency that serves the financial arm of a country's government. Usually such an agency is responsible for monitoring and controlling the growth of the money supply, and maintaining order in the bond and money markets, as well as overseeing international trading in the country's currency.


A document providing evidence of ownership of a security such as a stock or bond.

Certificate of Deposit (CD):

The CD is a security issued by a bank stating that it has borrowed money from you and will pay it back with interest at a certain time. Large denomination CD's are typically negotiable.

Certified Financial Planner:

An individual who has passed the Canadian Institute of Financial Planner and has a sound general knowledge of personal and corporate finance.

Chartered Banks:

Financial institutions regulated under the Bank Act. Chartered banks are designated as Schedule I or Schedule II, depending on their ownership.

Character (3 Cs). Will you repay the debt? Creditors will look at your credit history - how much you owe, how often you borrow, whether you pay bills on time, and whether you live within your means. They also look for signs of stability: how long you've lived at your present address, whether you own or rent your home, and length of your present employment.
Chattel: Personal property other than interest in land

Chequing Account:

An account at a bank, trust company, loan association or credit union on which there is normally no interest paid, but against which cheques may be written.

Chequing Savings Account:

An account at a bank, trust company, loan association or credit union on which there is no interest paid, but against which cheques are drawn.

Chinese Wall:

A term used to describe a invisible dividing line between two companies controlled by a common parent, when the engaged in activities that would normally be deemed to in conflict of interest.


The act of a broker buying and selling a investors securities for the commission revenue, for his own gain and if the investor gains, more the better.


Canadian Investor Protection Fund. A contingency fund set up by the Investment Dealers Assocation (IDA) and several Canadian stock exchanges to protect investors against losss up to certain maximum amounts resulting from the bankruptcy of a member firm.


This term refers to the amount of Old Age Security (OAS) payments that are repaid through a special tax on high income pensions.

Clearing & Settlement (Banks):

The process whereby banks collect or pay out items drawn on or paid into accounts in their institution. This process enables banks to accept each other's cheques and bank drafts for deposit. The CPA operates Canada's clearing system.


Closed Mortgage:

A mortgage agreement which does not provide for prepayment prior to maturity. A lender may permit prepayment under certain circumstances but will levy a prepayment charge for doing so.

Closely-Held Corporation:

Generally refers to a private corporation with very few shareholders.

Closing Date (Real Estate):

The date on which the sale of a property becomes final and the new owner takes possession.

Closing Out:

Liquidating or offsetting an existing long or short future position, also known as "exiting".

Closed-End Fund:

A fund company that issues a fixed number of shares. Its shares are not redeemable, but are bought and sold on the stock exchange or the over-the-counter market.


An instrument in writing executed by a testator for adding to, altering, explaining or confirming a will previously made by the testator; executed with the same formalities as a will; and having the effect of bringing the date of the will forward to the date of codicil.

Collateral (3 Cs). Is the creditor fully protected if you fail to repay? Creditors want to know what you may have that could be used to back up or secure your loan and other resources you have for repaying debt other than income, such as savings, investments, or property.


Assets pledged as security for a loan. If the borrower defaults on payment, the lender may dispose of the property pledged as security to raise money to repay the loan.

Collateral Mortgage:

A loan backed up by a promissory note and the security of a mortgage on a property. The money borrowed may be used for the purchase of the property itself or for another purpose, such as home renovations or a vacation.

Collateral Trust Bonds:

Secured by other securities but not property.

Commercial Banking:

Banking services for small and medium-sized businesses, such as franchising, leasing and cash management services.

Commercial Paper:

An unsecured promissory note with a fixed maturity of no more than 270 days. Commercial paper is normally sold at a discount from face value.


The raw materials of commerce, such as fuels, metals and food products.

Commodity and Foreign Exchange Futures:

A formal contract, traded in the same manner as a security, wherein the seller agrees to deliver a fixed quantity of a particular commodity (grain, gold, potatoes, cocoa, etc.) or a foreign currency to the purchaser at a specified date.

Common Disaster (Insurance):

An event, or series of events, causing the death of both spouses within a specified amount of time.

Common Equity (Shares):

A generic term describing stocks that represent ownership of a company and carry voting privileges in its affairs. The instruments have no security against assets, have no fixed terms of repayment and pay no fixed dividends.

Commute Value:

The commuted value of a benefit refers to how much a benefit is worth today. Commuted values express the lump sum value of some sort of promised benefit, usually from a defined benefit pension plan. The commuted value takes into account the benefits, interest and mortality (if any).

Comfort Letter:

An accountant's opinion that a financial statement appears to be correct.

Competitive Advantage: The resources that differentiate a business from its competitors.

Compliance Officer:

A person employed by a firm to make sure that employees follow internal and or securities industry rules.


Compound Interest:

The total return produced by investment capital and the reinvestment of interest.

Compound Return:

The increase in wealth that results from reinvestment, for example if $1,000 were invested in a savings account at 7% interest compounded annually, at the end of the year there would be $1,070. If the $70 interest were withdrawn from the account, there would be no compound return as there would be no reinvestment. If the $70 were left in the savings account along with the original $1,000 investment for another year, 7% interest would be earned on the $1,070 total. This would produce a final amount after two years of $1,144.90.

Comprehensive General Liability Insurance:

A broad liability insurance policy designed to protect you from a wide range of liabilities risks, including product and professional liability.


Concept Company:

An idea company listed on a minor stock exchange.



A form of ownership in which the owner has title to a housing unit and also owns a share in the common elements (such as elevators, hallways, and perhaps the land).

Confidentiality Agreement: A legal document where one party pledges to keep secret certain information that is to be placed in his control.
Contingency: Making arrangement's for a unknown situation, may be positive or negative E.g. Contingency fund - Moines set aside as insurance for a possible future problem that can be solved with a cash payment.


A large group of companies spanning different industrial or business activists, controlled by a single entity.

Conservative (Investment):

This is a relatively stable and predictable investment that usually features a specific (or limited) gain or loss.

Construction Loan (Interim Loan):

A loan to provide the funds necessary to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses.

Consumer Debt:

This term applies to debt incurred for consumable or depreciating assets that aren't considered investments. Items include credit card debt, store-financed consumer purchases, car loans, family loans that will be repaid, etc.

Consumer Price Index:

The statistical device that measures the change in the cost of living for consumers. It is used to illustrate the extent that prices have risen or the amount of inflation that has taken place.

Contract (Trading):

The basic unit in derivatives trading. With stocks, a contract usually represents 100 shares of the underling security.

Contractual Price:

A term used in the financial markets. An arrangement whereby an investor contracts to purchase a given amount of security by a certain date and agrees to make partial payments at specified intervals.


An individual who's opinion is the opposite of any generally accepted idea.

Contributed Surplus:

That portion of shareholder's equity shown on the balance sheet that comes from the sale of stock by the company at prices above the stated par value.

Conventional Mortgage:

A mortgage loan which does not exceed 75% of the appraised value or purchase price of the property, whichever is the lesser of the two. Mortgages that exceed this limit must be insured.

Convertible Bond:

A bond issued by a corporation that can be converted into a pre-arranged number of shares of stock by a specified date or set of dates or under defined circumstances.

Convertible Term:

Term life insurance which can be converted to any permanent or whole life policy without evidence of insurability, subject to time limitations.

Co-Branded Credit Card:

An alliance between a card issuer and a large no-profit-taking corporation which offers discounts/rewards to cardholders for using the card that bears the corporation's name.

Core Asset:

An asset not considered dispensable, the main business activity undertaken by a company, also called "strategic asset". A non-core asset is described as no longer essential to the company's basic business.

Corporate Banking:

Banking services for large firms.

Corporate Profits:

A rise or fall in profits can affect the amount of capital available for business spending and expansion, so profitability is a closely watched indicator.


A legal business entity created under federal or provincial statues. Because the corporation is a separate entity from its owners, shareholders have no legal liability for its debts.


A market correction is usually a sudden temporary decline in stock or bond prices after a period of market strength.

Correction in the Market:

A significant drop in the value of the stock market.

Correspondent Bank:

Usually a bank located in a foreign country with whom a domestic bank transacts commercial business, and to whom the domestic bank will refer customers for banking services in that country.

Cosigner: Another person who signs your loan and assumes equal responsibility for it.


A form of ownership in which the owner has a share in the co-operative which actually owns the property. The individual owner has the right to live in a housing unit but does not own the actual unit.


In common usage, the percentage of a bond's issuer in a year. For example, a 9% coupon on a $1,000 bond is worth $90 a year. On some types of bonds, the coupon is also the little rectangle piece of paper that must be detached from the bond certificate and cashed at a bank or trust company on or after the appropriate payment date in order for the interest to be paid.

Coupon Rate:

The interest rate payable to the bond holders. Bond Interest is usually paid on a semi-annually basis.

Coupon vs. Yield:

The coupon on a bond is literally the portion of a certificate that is clipped (detached) and presented for payment when interest is due but the coupon also is used as a term for the rate of interest a bond pays. Yield is the current return on a bond in the market. As market conditions change, yield on the bonds rise or fall. If a bond bought at par, then the yield and the coupon rate are the same. But if the yield falls, the price of the bond must rise. And rising yields mean falling prices.

Covarience (volatility measure):

This is a measure that reflects both the variance (volatility) of a stock's returns and the tendency of those returns to move up or down at the same time relative to other stocks (their correlation). This is a way to see if two stocks tend to move up or down together and also see the size of those movements.


A action taken by an uncovered Option writer or other individual investor' to deposit a letter of credit issued by an approved financial institution to guarantee the investor's /Option writers short position, or provide securities or cash to the investment dealer/Bank/broker.

Cover Call Writer:

A person who is a seller/writer of a call option:

1) owns the corresponding quantity of the underlying interest covered by the Option; or

2 ) owns a security convertible into the equivalent quantity of the underlying interest; or

3) or owns a Call on the same underlying interest with an expiration equal to (or longer than of) the written Call; or

4) has an escrow receipt or letter of credit.

Cover Put Writer:

A person who is a seller/writer of a put option who owns an equivalent number of puts on the same underling interest with an expiration equal to or longer than the Puts sold.

Credit The right granted by a creditor to pay in the future to buy or borrow in the present; a sum of money due a person or business.
Credit Bureau An agency that keeps your credit record; also called a credit-reporting agency.

Credit/Debt Cards

Cards such as Visa and Mastercharge allow the holder to charge purchases rather than pay cash. Debt card allows the cost of the purchase to be automatically deducted from the customer's bank account and credited to the merchant.

Credit History The record of how you've borrowed and repaid debts.
Creditor A person or business from whom you borrow or to whom you owe money.
Credit Insurance Health, life, accident, or disruption of income insurance designed to pay the outstanding balance of debt.
Credit Loss: A loan receivable that has become uncollectable and is written off.
Credit Scoring System: A statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.
Credit Union: Are community based financial co-operatives. Owned and controlled by members who are also shareholders. Most offer full financial services, mortgages through savings accounts.
Creditworthiness Past, present and future ability to repay debts.

Critical Illness Insurance:

A form of health insurance that provides payments to replace income when an insured person is unable to work as a result of a critical illness.

Cross Rates (Foreign Exchange):

Foreign Exchange values between major trading counties-currencies traded in futures markets around the world. Financial Institutions and corporate treasurers can hedge currency risk.

Currency Options:

Also known as foreign-exchange options, currency options on the CDN$ trade on U.S and foreign exchanges. Option on other major currencies are traded around the world.

Current Account:

A type of bank account normally use for business, a chequing account that bears no interest.

Current Account (Canada):

The accounting if Canada's international dealings. The bottom line is a net number after accounting for exports, imports, flows of investment funds, tourist travel and certain transfers in or out of the country such as pension payments to Canadians living abroad.

Current Assets:

Assets appearing on a company's balance sheet that can be converted into cash or used in production within a short period, usually one year.

Current Issue:

In treasury bills and notes, the most recently auctioned issue. Trading is more active in current issues than in off-the-run issues.

Current Liabilities:

The liabilities appearing on a company's balance sheet that are expected to be paid or otherwise extinguished in a short period, usually one year.

Current Maturity:

Current time to maturity on an outstanding note, bond or other money market instrument; for example, a 5 year note 1 year after issue has a current maturity of 4 years.

Current ratio: Current assets compared to current liabilities. A term used to indicate liquidity.

Current Service Contribution:

Contribution made to a pension plan by an employer and based on the benefit earned in the current year.

Current Yield:

Coupon payments on a security as a percentage of the security's market price. In many instances the price should be gross of accrued interest, particularly on instruments where no coupon is left to be paid until maturity.


A financial institution, usually a bank or trust company, that holds a person or company's cash, securities in safekeeping.

Cyclical Companies:

Companies that report strong earnings when the overall economy is doing well and weaker earnings when the economy is in a recession.

Cyclical Stock:

Stock in an industry that is particularly sensitive to swings in economic conditions, such as forestry or mining..


A financial institution, usually a bank or trust company, that holds a person or company's cash, securities in safekeeping.


Canada Deposit Insurance Corporation


Canada Mortgage & Housing Corp.


Consumer Price Index. An index compiled by Statistics Canada showing the cost-of-living changes during a specified period of times.


Canada Pension Plan. Provides benefits to Canadians in the event of death, disability or retirement. To be eligible for benefit a person must have made contributions to the plan for a specified minimum period.


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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