C Flashcards

Question

Capital Loss

Answer 1

Selling a security for less than its purchase price. Capital losses can only be applied against capital gains. Surplus losses can be carried forward indeﬁnitely and used against future capital gains. Only 50% of the loss can be used to offset any taxable capital loss.

Answer 2

Financial markets where debt and equity securities trade. Capital markets include organized exchanges as well as private placement sources of debt and equity.

Answer 3

All shares representing ownership of a company, including preferred as well as common. Also referred to as equity capital.

Answer 4

Total dollar amount of all debt, preferred and common stock, and retained earnings of a company. Can also be expressed in percentage terms

Answer 5

Recording an expenditure initially as an asset on the statement of ﬁnancial position rather than as an expense on the statement of comprehensive income, and then writing it off or amortizing it (as an expense on the statement of comprehensive income) over a period of years. Examples include interest, and research and development.

Answer 6

The amount of RRSP contributions that can be carried forward from previous years. For example, if a client was entitled to place $13,500 in an RRSP and only contributed $10,000, the difference of $3,500 would be the unused contribution room and can be carried forward indeﬁ nitely

Answer 7

A type of brokerage account where the investor is expected to have either cash in the account to cover their purchases or where an investor will deliver the required amount of cash before the settlement date of the purchase.

Answer 8

A company’s profit for a stated period plus any deductions that are not paid out in actual cash, such as depreciation. For an investor, any source of income from an investment including dividends, interest income, rental income, etc.

Answer 9

Involves writing a put option and setting aside an amount of cash equal to the strike price. If the cash-secured put writer is assigned, the cash is used to buy the stock from the exercising put buyer.

Answer 10

The current market value of a segregated fund contract, less any applicable deferred sales charges or other withdrawal fees

Answer 11

An electronic trading system for fixed income securities operating in both retail and institutional markets.

Answer 12

CDS provides customers with physical and electronic facilities to deposit and withdraw depository-eligible securities and manage their related ledger positions (securities accounts). CDS also provides electronic clearing services both domestically and internationally, allowing customers to report, conﬁrm and settle securities trade transactions.

Answer 13

A body established by a national Government to regulate currency and monetary policy on a national/ international level. In Canada, it is the Bank of Canada; in the United States, the Federal Reserve Board; in the U.K., the Bank of England.

Answer 14

The use of charts and patterns to forecast buy and sell decisions. See also Technical Analysis.

Answer 15

Policies implemented to separate and isolate persons within a ﬁrm who make investment decisions from persons within a ﬁrm who are privy to undisclosed material information which may inﬂuence those decisions. For example, there should be separate fax machines for research departments and sales departments.

Answer 16

Shares that have different classes sometimes have different rights. Some may have superior claims over other classes or may have different voting rights. Class A stock is often similar to a participating preferred share with a prior claim over Class B for a stated amount of dividends or assets or both, but without voting rights; the Class B may have voting rights but no priority as to dividends or assets. Note that these distinctions do not always apply.

Answer 17

A not-for-proﬁ t service organization owned by the exchanges and their members for the clearance, settlement and issuance of options and futures. A clearing corporation provides a guarantee for all options and futures contracts it clears, by becoming the buyer to every seller and the seller to every buyer

Answer 18

Shares in closed-end investment companies are readily transferable in the open market and are bought and sold like other shares. Capitalization is ﬁ xed. See also Investment Company

Answer 19

A portfolio strategy whereby the fund manager does not replicate the market exactly but sticks fairly close to the market weightings by industry sector, country or region or by the average market capitalization.

Answer 20

Statistical data that, on average, change at approximately the same time and in the same direction as the economy as a whole.

Answer 21

A bond secured by stocks or bonds of companies controlled by the issuing company, or other securities, which are deposited with a trustee.

Answer 22

An unsecured promissory note issued by a corporation or an asset-backed security backed by a pool of underlying ﬁnancial assets. Issue terms range from less than three months to one year. Most corporate paper trades in $1,000 multiples, with a minimum initial investment of $25,000. Commercial paper may be bought and sold in a secondary market before maturity at prevailing market rates.

Answer 23

The fee charged by a stockbroker for buying or selling securities as agent on behalf of a client.

Answer 24

A product used for commerce that is traded on an organized exchange. A commodity could be an agricultural product such as canola or wheat, or a natural resource such as oil or gold. A commodity can be the basis for a futures contract.

Answer 25

Securities representing ownership in a company. They carry voting privileges and are entitled to the receipt of dividends, if declared. Also called common shares.

Answer 26

A distribution method used in particular by the Bank of Canada in distributing new issues of government marketable bonds. Bids are requested from primary distributors and the higher bids are awarded the securities for distribution. See also Non-Competitive Tender.

Answer 27

Interest earned on an investment at periodic intervals and added to the amount of the investment; future interest payments are then calculated and paid at the original rate but on the increased total of the investment. In simple terms, interest paid on interest.

Answer 28

A printed acknowledgement giving details of a purchase or sale of a security which is normally mailed to a client by the broker or investment dealer within 24 hours of an order being executed. Also called a contract.

Answer 29

A combination of the ﬁnancial statements of a parent company and its subsidiaries, presenting the ﬁnancial position of the group as a whole.

Answer 30

See Reverse Split.

Answer 31

Price index which measures the cost of living by measuring the prices of a given basket of goods. The CPI is often used as an indicator of inﬂation.

Answer 32

A chart formation indicating that the current | trend will continue.

Answer 33

In Ontario, a reporting issuer must issue a press release as soon as a material change occurs in its affairs and, in any event, within ten days. See also Timely Disclosure.

Answer 34

The owner of a segregated fund contract.

Answer 35

Represents a downturn in the economy and | can lead to a recession if prolonged.

Answer 36

Transferring securities into an RRSP. The general rules are that when an asset is transferred there is a deemed disposition. Any capital gain would be reported and taxes paid. Any capital losses that result cannot be claimed.

Answer 37

The dollar value at which a convertible bond or security can be converted into common stock.

Answer 38

The right to exchange a bond for common | shares on speciﬁcally determined terms.

Answer 39

A bond, debenture or preferred share which may be exchanged by the owner, usually for the common stock of the same company, in accordance with the terms of the conversion privilege. A company can force conversion by calling in such shares for redemption if the redemption price is below the market price.

Answer 40

A strategy that looks for mispricing between a convertible security and the underlying stock. A typical convertible arbitrage position is to be long the convertible bond and short the common stock of the same company.

Answer 41

A measure of the rate of change in duration over changes in yields. Typically, a bond will rise in price more if the yield change is negative than it will fall in price if the yield change is positive.

Answer 42

An unsecured promise made by the borrower to pay interest and repay the principal at a speciﬁc date.

Answer 43

A form of business organization created under provincial or federal statutes which has a legal identity separate from its owners. The corporation’s owners (shareholders) have no personal liability for its debts. See also Limited Liability.

Answer 44

A price reversal that typically occurs when a security has been overbought or oversold in the market.

Answer 45

A measure of the relationship between two or more securities. If two securities mirror each other’s movements perfectly, they are said to have a positive one (+1) correlation. Combining securities with high positive correlations does not reduce the risk of a portfolio. Combining securities that move in the exact opposite direction from each other are said to have perfect negative one (-1) correlation. Combining two securities with perfect negative correlation reduces risk. Very few, if any, securities have a perfect negative correlation. However, risk in a portfolio can be reduced if the combined securities have low positive correlations.

Answer 46

Used when a company owns less than 20% | of a subsidiary.

Answer 47

A statement of comprehensive income account representing the cost of buying raw materials that go directly into producing ﬁnished goods.

Answer 48

A type of inﬂation that develops due to an increase in the costs of production. For example, an increase in the price of oil may contribute to higher input costs for a company and could lead to higher inﬂation.

Answer 49

The rate of interest that appears on the certiﬁcate of a bond. Multiplying the coupon rate times the principal tells the holder the dollar amount of interest to be paid by the issuer until maturity. For example, a bond with a principal of $1,000 and a coupon of 10% would pay $100 in interest each year. Coupon rates remain ﬁxed throughout the term of the bond. See also Yield.

Answer 50

A pledge in a bond indenture indicating the fulfilment of a promise or agreement by the company issuing the debt. An example of a covenant may include the promise not to issue any more debt.

Answer 51

Buying a security previously sold short. See | also Short Sale.

Answer 52

The writer of an option who also holds a position that is equivalent to, but on the opposite side of the market from the short option position. In some circumstances, the equivalent position may be in cash, a convertible security or the underlying security itself. See also Naked Writer.

Answer 53

Canadian Unlisted Board – a web-based | trade reporting system for unlisted securities.

Answer 54

With dividend. If you buy shares quoted cum dividend, i.e., before the ex dividend date, you will receive an upcoming already-declared dividend. If shares are quoted ex-dividend (without dividend) you are not entitled to the declared dividend.

Answer 55

With rights. Buyers of shares quoted cum rights, i.e., before the ex-rights date, are entitled to forthcoming already-declared rights. If shares are quoted ex rights (without rights) the buyer is not entitled to receive the declared rights

Answer 56

A preferred stock having a provision that if one or more of its dividends are not paid, the unpaid dividends accumulate in arrears and must be paid before any dividends may be paid on the company’s common shares.

Answer 57

Account that reﬂects all payments between Canadians and foreigners for goods, services, interest and dividends. Along with the capital and ﬁnancial account it is a component of the balance of payments.

Answer 58

Cash and assets which in the normal course of business would be converted into cash, usually within a year, e.g. accounts receivable, inventories. A statement of ﬁnancial position category.

Answer 59

Money owed and due to be paid within a year, e.g. accounts payable. A statement of ﬁnancial position category.

Answer 60

A liquidity ratio that shows a company’s ability to pay its current obligations from current assets. A current ratio of 2:1 is the generally accepted standard. See also Quick Ratio.

Answer 61

The annual income from an investment expressed as a percentage of the investment’s current value. On stock, calculated by dividing yearly dividend by market price; on bonds, by dividing the coupon by market price. See also Yield.

Answer 62

A firm that holds the securities belonging to a mutual fund or a segregated fund for safekeeping. The custodian can be either the insurance company itself, or a qualiﬁed outside ﬁrm based in Canada.

Answer 63

A stock in an industry that is particularly sensitive to swings in economic conditions. Cyclical Stocks tend to rise quickly when the economy does well and fall quickly when the economy contracts. In this way, cyclicals move in conjunction with the business cycle. For example, during periods of expansion auto stocks do well as individuals replace their older vehicles. During recessions, auto sales and auto company share values decline.

Answer 64

The amount of unemployment that rises when the economy softens, ﬁrms’ demand for labour moderates, and some ﬁrms lay off workers in response to lower sales. It drops when the economy strengthens again.

C Flashcards

(88 cards)