Dealer:

A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account.

Debentures are similar to bonds, but typically not secured by the pledge of specific corporate assets. They may, however, be secured by a "floating charge" on the issuer's assets generally.

Debenture (Guaranteed under CDIC):

A debenture is the instrument a mortgage loan company or a savings and loan company issue. Debentures have stated maturity dates and rates of interest. They are insured up to the $100,000 limit with Canada Deposit Insurance Corp. the same way GICs are insured by trust companies.

Debt:

An obligation to repay a sum of principal, plus interest. In corporate terms, debt often refers to bonds or similar securities.

Debt Cards:

A card that allows the cost of a purchase to be automatically deducted from the customer's bank account and credited to the merchant.

Debt Capacity:

An assessment of a person of firms ability and willingness to repay a loan from anticipated future income or cash flow of other sources.

Debt Issues:

The issuance of bonds or other forms of debt on the public markets.

Debt Markets:

That sector of the capital markets devoted to trading debt securities issued by corporations and governments.

Debt Securities:

IOU's created through loan-type transactions - commercial paper, Bank CD's, bills, bonds, debentures, GICs, term deposits.

Debt Security:

A general term embracing all legal documents that represent a debt between two parties in a form that can be transferred from one holder to another. See also bond and money market.

Decreasing Term:

Insurance benefits reduced monthly or yearly with the premium remaining constant (In standard policies, premiums increase and benefits remain constant.)

Deed of Conveyance:

A signed document outlining the terms of a property grant, including a description of the sellers, the buyer and any interest being transferred.

Deemed Disposition:

Is when CCRA deems that you have disposed of all your assets on your death and that any capital gains would be then deemed realized and tax would therefore be due.

Default:

A borrower defaults on his obligations when he fails to make a required payment of principal or interest at a specified time.

Deflationary:

A situation where the general price level of goods and services is declining.

Deferral:

A form of tax sheltering that results from an investment that offers deductions during the investor's high-income years, and/or postpones capital gains or other income until after retirement or during another period when the income level is expected to change.

Deferred Annuity/RRIF:

An annuity or RRIF under which income payments to the annuitant commence some time after the date it is purchased. A registered retirement income fund (RRIF) is an investment vehicle used to produce income in retirement. Generally RRIFs are established by transferring money from an RRSP into the RRIF.

Deferred Compensation:

Income paid at some future time, usually upon retirement or termination of employment.

Deferred Profit Sharing Plan:

A plan that allows an employer to set aside a portion of company profits for the benefit of employees. A corporation makes a contribution to the plan on behalf of an employee.

Defined Benefit Pension Plan:

.A defined benefit pension plan is a pension plan, generally sponsored by an employer, that promises to pay a certain benefit at retirement. Most (DB) plans have a benefit based on a flat amount ($20 per year of service), on career earnings or on final earnings. These plans may be contributory or non-contributory.

Defined Contribution Plan:

A pension plan under which employer and employee contributions are fixed and the pension is based on these contributions.

Delivery Month:

This term is used by futures traders to describe the contract of a specific commodity with the nearest possible date. The "deliver month" is also frequently called "spot month".

Demand Curve:

A graph that illustrates the relationship between the quantity demanded and price.

Demand Line of Credit/Loan:

A line of credit that enables a customer to borrow on a daily or on demand basis. Credit cards are a prime example. A demand loan must be repaid in full on demand.

Demographics:

The characteristics of a human population such as age, sex and income used for market research, sociological analysis and other such purposes.

Denomination:

The principal amount, or value at maturity, of a debt obligation. Also known as the par value or face value.

Deposit Broker:

1) A person or corporation that acts as agent for a Trust Company or Bank selling Guaranteed Investment Certificates, Term Deposits and RRSPs.

2) A person or corporation that is a member of:- The FEDERATION OF CANADIAN INDEPENDENT DEPOSIT BROKERS INC.

Deposit Insurance:

The Canada Deposit Insurance Corp. insures depositor's funds to a maximum of $100,000 per depositor, per institution.

Depreciation:

Charges made against earnings to write off the cost of a fixed asset over its estimated useful life. Deprecation does not represent a cash outlay.

It is a bookkeeping entry representing the decline in value of an asset that is wearing out.

Depreciating Capital Assets:

Assets which decrease in value over time.

Derivatives:

Financial contracts whose values are derived from an underlying asset, index or reference rate, such as interest rates, foreign exchange rates, or equity or commodity prices. Derivative can be used to manage financial risks and consist of:

-Interest rates swaps: A contact between two parties to exchange a stream of interest rate payments, such as fixed rate payments for variable rates payments, on a specified notional value for a pre-determined time period.

- Swaps that have been entered into, but for which interest rate payment streams have not commenced by year-end, are referred to as forward starting swaps.

- Interest rate caps and floors: Option contracts for specified periods, based on interest rates, for which a cost (premium) is settled in advance. In the case of a cap, the agreement places a maximum on the cost of interest rate borrowings. In the case of a floor, the agreement places a minimum on the yield of interest rate investments.

- Forward rate agreements: A contract for payment or receipt of interest on a specified principal to be settled at a future date. The settlement amount is the difference between the contracted rate of interest and the market rate.

-foreign exchange forward contracts: A contract to buy or sell a fixed amount of foreign currency on a specified date at a set rate of exchange.

- Index-linked call option: The right but not the obligation to buy on or before a specified date, an underlying notional amount at a contracted price based on a stock market index.

Devise:

A disposition of real estate by will.

Direct Costs:

Actual dollars that must be spent.

Direct Debt:

A means of authorizing recurring payments (e.g. mortgage payments, insurance premiums) to be drawn on an account.

Direct deposit/Direct Funds Transfer (DTF):

A means of authorizing payment made by governments or companies to be deposited directly into a recipient's account. Used mainly for the deposit of salary, pension and interest cheques.

Direct Placement:

Selling a new issue not by offering it for sale publicly but by placing it with one or several institutional investors.

Disability Insurance:

Insurance that is designed to replace earned income in the event that accident or illness prevents you from pursuing your livelihood.

Discharge (Real Estate):

Pay off. To repay a debt in full.

Discount Bond:

A bond selling below par.

Discount Securities:

Non interest-bearing money market instruments that are issued at a discount and redeemed at maturity for full face value. E.g. Canadian and U.S. Treasury Bills.

Discount/Rate:

The amount by which a investment sells below its face amount. If indicated as a rate. Its a rate of return used to convert a monetary sum, payable or receivable in the future, and shown as a present value.

Disposable Income:

Is defined as total consumer income less taxes and government transfers.

Distributions:

Payments to investors by a mutual fund from income or profit realized from sales of securities.

Diversification:

The investment in a number of different securities. This reduces the risks inherent in investing. Diversification may be among types of securities, companies, industries or geographical locations. You can't count on the stock market alone to make you rich - especially if your money is in just one stock or even just in Canada. You can't count on your house to fund your retirement. Various economic conditions lend themselves to different weighting

Dividends:

Dividends are the share of a company's stock. Not all profits are paid in dividends; some are usually reinvested in building up the operations of the company, with the intention of producing additional future profits.

Dividend Gross-Up:

The adjustment to dividend amounts used to calculate tax credit. Dividends paid by Canadian corporations are subject to a dividend gross-up of 25%. There is a combined federal & provincial tax credit of about 25% on the amount of the dividend. The dividend gross-up is amount added to the actual dividend when calculating the dividend tax credit (1997).

Dividend Record Date:

The date on which the list of shareholders entitled to receive a dividend is fixed. Investors who purchase shares after this date will not be entitled to receive the dividend.

Dividend Re-investment Plan:

A Plan that allows shareholders to purchase more shares from dividends rather than receiving the dividend as income.

Dividend Tax Credit:

An income tax credit available to investors who earn dividend income through investment in shares of Canadian corporations.

Dividend Yield:

The current yield on a stock based on the dividend paid.

Documentary Credit:

Written undertaking by a bank on behalf of an importer authorizing an exporter to draw drafts on the bank up to a specified amount under specific terms and conditions. Some time know as commercial letter of credit

Dollar Cost Averaging:

A principal of investing which entails the use of equal amounts for investment at regular intervals in the hope of reducing average share cost by acquiring more shares in periods of lower securities prices and fewer shares in periods of higher securities prices.

Domicile:

The "official" residence of an individual. For insurance contracts, the province of domicile determines under which provincial laws the deceased estate will be probated. Everyone has a "domicile of origin" until they adopt a "domicile of choice".

Dow Jones Industrial Average (DIJA):

The weighted average price of 30 blue chip U.S. stocks listed on the New York Stock Exchange.

Down Payment (Real Estate):

The amount of money (in the form of cash) put forward by the purchaser. Usually, it represents the difference between the purchase price and the amount of the mortgage loan.

DPSP:

Deferred Profit Sharing Plan. A plan which an employer may institute on behalf of employees to allow deferment of taxes on profit distribution to the employees.

Due Diligence:

A term and process used to Identify any risks and issues relating to a proposed transaction. Process of systematically evaluating all information, and verity that it is, what is proposed to be.

Durable Goods:

Orders for durable goods-products expected to last more than three years, such as business machinery and major household appliances - are leading indicator because company orders respond to changes in demand. Retail sales of durable goods to consumers are another leading indicator. Because such purchases can be put off during bad times, any increase reflects a changing trend in consumer spending.

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. Click to contact Glossary editor or see the permissions page.