F Flashcards
(34 cards)
Face Value
The value of a bond or debenture that
appears on the face of the certificate. Face
value is ordinarily the amount the issuer
will pay at maturity. Face value is no
indication of market value.
Fee-Based Accounts
A type of account that bundles various
services into a fee based on the client’s assets
under management, for example, 1% to 3%
of client assets
Fiduciary Responsibility
The responsibility of an investment advisor,
mutual fund salesperson or fi nancial
planner to always put the client’s interests
fi rst. The fi duciary is in a position of trust
and must act accordingly
Final Good
A finished product, one that is purchased
by the ultimate end user.
Final Prospectus
The prospectus which supersedes the
preliminary prospectus and is accepted for
fi ling by applicable provincial securities
commissions. The fi nal prospectus shows all
required information pertinent to the new
issue and a copy must be given to each
fi rst-time buyer of the new issue
Financial Intermediary
An institution such as a bank, life insurance
company, credit union or mutual fund
which receives cash, which it invests, from
suppliers of capital.
Financing
The purchase for resale of a security issue by one or more investment dealers. The formal agreement between the investment dealer and the corporation issuing the securities is called the underwriting agreement. A term synonymous with underwriting
First-In-First-Out (FIFO)
Inventory items acquired earliest are sold
first.
First Mortgage Bonds
The senior securities of a company as they
constitute a first charge on the company’s
assets, earnings and undertakings before
unsecured current liabilities are paid.
Fiscal Agent
An investment dealer appointed by a
company or government to advise it in
financial matters and to manage the
underwriting of its securities.
Fiscal Year
A company’s accounting year. Due to the
nature of particular businesses, some
companies do not use the calendar year for
their bookkeeping. A typical example is the
department store that finds December 31
too early a date to close its books after the
Christmas rush and so ends its fiscal year on
January 31.
Fixed Asset
A tangible long-term asset such as land,
building or machinery, held for use rather
than for processing or resale. A statement
of fi nancial position category
Fixed Exchange Rate Regime
A country whose central bank maintains
the domestic currency at a fixed level against
another currency or a composite of other
currencies.
Fixed-Floater Preferred
See Delayed Floater.
Fixed-Income Securities
Securities that generate a predictable stream
of interest or dividend income, such as
bonds, debentures and preferred shares
Fixed-Reset Preferred
See Delayed Floater
Flat
Means that the quoted market price of a
bond or debenture is its total cost (as
opposed to an accrued interest transaction).
Bonds and debentures in default of interest
trade fl at.
Floating Exchange Rate
A country whose central bank allows market
forces alone to determine the value of its
currency, but will intervene if it thinks the
move in the exchange rate is excessive or
disorderly.
Floating Rate
A term used to describe the interest
payments negotiated in a particular contract.
In this case, a floating rate is one that is
based on an administered rate, such as the
Prime Rate. For example, the rate for a
particular note may be 2% over Prime. See
also Fixed Rate.
Floating-Rate Debentures
A type of debenture that offers protection
to investors during periods of very volatile
interest rates. For example, when interest
rates are rising, the interest paid on floating
rate debentures is adjusted upwards every
six months.
Floor Trader
Employee of a member of a stock exchange,
who executes buy and sell orders on the
floor (trading area) of the exchange for the
firm and its clients.
Forced Conversion
When a company’s stock rises in value above
the conversion price a company may force
the convertible security holder to exchange
the security for stock by calling back the
security. Faced with receiving a lower call
price (par plus a call premium) or higher
valued shares the investor is forced to
convert into common shares.
Foreign Bonds
If a Canadian company issues debt securities
in another country, denominated in that
foreign country’s currency, the bond is
known as a foreign bond. A bond issued in
the U.S. payable in U.S. dollars is known as
a foreign bond or a “Yankee Bond.” See also
Eurobond.
Foreign Exchange Rate Risk
The risk associated with an investment in a
foreign security or any investment that pays
in a denomination other than Canadian
dollars, the investor is subject to the risk
that the foreign currency may depreciate in
value.
