A loan which may be terminated or "called" at any time by the lender. The loan is then immediately payable, with any accrued interest, by the borrower to the lender. These loans are used to finance purchases of securities and exclude personal loans extended by banks to its customers.
An option which gives the holder the right, but not the obligation, to buy a fixed amount of a certain stock at a specified price within a specified time. Calls are purchased by investors who expect a price increase.
Securities which may be redeemed upon due notice by the security's issuer. In the case of bonds, issuers of bonds may reserve the right to pay off the bond before maturity to take advantage of lower interest rates.
An industry sponsored fund that protects investors from losses resulting from the bankruptcy of a member firm. The maximum coverage is $500,000 per account, of which up to $60,000 can be cash. The CIPF is sponsored by the Investment Dealers Association of Canada, the Toronto Stock Exchange and Futures Exchange, and the Montreal, Vancouver and Alberta Stock Exchanges.
This association operates a highly automated national clearing system for interbank payments which reduces costs and increases the efficiency of the clearing system in Canada. Members include chartered banks, trust and loan companies and some credit unions.
An order that cancels or changes a customer's current order.
To economists, capital means the machinery, factories and inventory required to produce other products. To investors, capital means their cash plus the financial assets they have invested in securities, their home and other fixed assets.
An amount allowed under the Income Tax Act to be deducted from the value of certain assets and treated as an expense in computing an individual's or company's income for a taxation year. It may differ from the amount charged for the period in depreciation accounting.
Profit or loss resulting from the sale of certain assets classified under the federal income tax legislation as capital assets. This includes stocks and other investments such as investment property.
This market brings together all the providers and users of capital, all the financial products, like stocks and bonds which make the transfer of capital possible, and all the people and organizations which support the process.
All shares representing ownership of a company, including preferred as well as common shares.
Total dollar amount of all money invested in a company, such as debt, preferred and common shares, contributed surplus and retained earnings of a company. It can also be expressed as a percentage.
A company's net income for a stated period plus any deductions that are not paid out in actual cash, such as depreciation, amortization, deferred income taxes and minority interest. Cash flow can provide a broader picture of a company's earning power than net earnings alone. Cash flow is important to investors as it shows the company's ability to pay dividends and finance expansion.
A body established by a national government to regulate currency and monetary policy on a national and international level. In Canada it is the Bank of Canada. In the United States it is the Federal Reserve Board and in the United Kingdom it is the Bank of England.
An engraved document which shows ownership of a bond, stock or other security.
A fixed-income debt security issued by most chartered banks, usually in minimum denominations of $1000 with maturity terms of one to six years.
Names used by companies to distinguish between two classes of common stock. Class A stock may receive cash dividends while Class B may receive stock dividends. There also could be differences in voting rights or in priority of assets. The investor should review the terms of the class designation prior to purchase to understand the rights of that class of stock.
An independent institution that ensures the payment and delivery of stocks and bonds between investment dealers in a timely, cost-efficient manner. For example, an investment dealer may execute 10 trades (buys and sells) in the same security on the same day. Through the clearing house the dealer just settles the difference in the number of shares and the difference in money owed or received.
This is a company which uses its capital to invest in other companies. Shares in a closed-end investment company are bought and sold on the stock market and the company's capital remains relatively unchanged.
The last transaction price for a stock on a particular stock exchange at the end of the trading day. If there was not an actual transaction that day, the close can refer to the last posted bid and ask prices.
Securities or other property pledged by a borrower as a guarantee for repayment of a loan.
A bond secured by stocks or bonds of companies controlled by the issuing company, or other securities, which are deposited with a trustee.
A letter filed with the applicable securities commissions by a company's auditor when submitting unsigned financial statements for use in a prospectus. The letter says that the final format of the statements should not be materially different from those attached to the letter. The letter is required because the auditor does not sign the report until the final prospectus is prepared for distribution. The signing is done after the securities commissions have reviewed the prospectus and any required changes have been made.
Short-term negotiable debt securities issued by non-financial corporations with terms of a few days to a year.
The fee charged by an investment advisor for buying or selling securities as an agent on behalf of a client.
Products used for commerce that are traded on a separate, authorized exchange, such as the Winnipeg Commodities Exchange or the Chicago Board of Trade. Commodities include agricultural products and natural resources such as timber, oil and metals, and are the basis for futures contracts traded on these exchanges.
Securities which represent ownership in a company and carry voting privileges. Common shareholders may be paid dividends but only after preferred shareholders are paid. Common shareholders are last in line after creditors, debt holders and preferred shareholders to claim any of a company's assets in the event of liquidation.
Interest earned on an investment at periodic intervals and added to the original amount of the investment. Future interest payments are then calculated and paid at the original rate but on the increased total of the investment. This is really interest paid on interest.
An electronic trading system developed by the Toronto Stock Exchange that allows traders anywhere in the world to trade stocks listed on the exchange. This was the first electronic trading environment developed in Canada.
Also called a contract. This is a printed acknowledgement giving details of a sale or purchase of a security, which is normally mailed to a client by the investment dealer within 24 hours of an order being executed.
A company directly or indirectly operating in a variety of industries, usually unrelated to each other. Conglomerates often acquire outside companies through the exchange of their own shares for the shares of the majority owners of the outside companies.
A combination of the financial statements of a parent company and its subsidiaries, presenting the financial position of the group as a whole.
Canadian banks, trust, insurance, broadcasting and communication companies have limits on the number of shares or percentage of shares owned by people who are not Canadian citizens or residents. Foreign ownership is restricted since these companies or institutions are either culturally important or fundamentally important to the Canadian economy.
A major inflation measure computed by Statistics Canada. It measures the change in prices of a fixed basket of a variety of goods and services in the previous month. This basket of goods is supposed to reflect the average needs of a Canadian family.
A securities issuer must issue a press release as soon as a material change occurs in its affairs and within ten days for any other changes in the company.
Part of shareholders' equity which originates from sources other than earnings, such as the initial sale of stock above par value.
A bond, debenture or preferred share which may be exchanged by the owner, usually for the common stock of the same company. Convertibles are attractive to investors as they provide the security and income of a bond, debenture or preferred share, as well as the opportunity to participate in the growth of the company through converting to common shares.
A form of business organization legally created under provincial or federal statutes which has a legal identity separate from its owners. The corporation's owners - its shareholders - are liable for its debts only to the extent of their investment, which is called limited liability.
A term for non-bank lenders such as corporations, insurance companies and other institutional short-term investors, none of which are under the jurisdiction of the Bank Act, who provide short-term sources of credit for investment dealers.
A mini-certificate actually attached to a bond certificate which represents an actual interest payment. The coupon becomes negotiable on the date the interest is due and usually represents the six month interest payment on the face value of the bond certificate. The term "coupon" is sometimes used as a slang reference to the interest rate paid on a debt instrument, i.e. the coupon of the new Government of Canada March 2015 is 8.75%. This means the interest rate is 8.75% per annum on the face value of the bond.
Buying a security that you had previously sold short.
When an investment dealer has both an order to sell and an order to buy the same stock at the same price, the transaction is allowed without interfering with the limits of the prevailing market. This is also called a put-through or contra order.
This means "with dividend." Buyers of shares quoted cum dividend are entitled to an upcoming already-declared dividend.
This means "with rights." Buyers of shares quoted cum rights are entitled to forthcoming rights.
A preferred stock which has a provision that if one or more of its dividends are omitted, these unpaid dividends accumulate and must be paid before any dividends may be paid on the company's common shares.
Cash and assets such as accounts receivable and inventories, which in the normal course of business can be converted into cash within a year. Current assets are found on the company's balance sheet.
Money owed to the company and due to be paid within a year, such as accounts payable. Current liabilities are found on the company's balance sheet.
Current assets of a business divided by current liabilities, thus measuring how much the value of current assets exceeds its liabilities. This is one of the tests to determine how much cash a company has on hand to cover its current liabilities.
The annual income from an investment expressed as a percentage of the investment's current value. On stock, this is calculated by dividing yearly dividends by the market price of the security. On bonds, this is calculated by dividing yearly interest by current price. For example, if the income is $50 a year on an investment with a value of $1,000, the current yield is 5%.
Stock in an industry that is particularly sensitive to swings in economic conditions, such as mining or forestry.
Back to top