Accrued Interest:    Interest that has been earned on a financial instrument but not received.

Amortization:  The gradual write-off of an asset over time.

Annualize:  The process of converting a non-annual rate of return into an annual rate of return.

Annual Report: An audited financial report prepared by independent auditors sent yearly to a publicly traded company’s shareholders containing, among other things, the names of the directors and officers, company earnings, and major corporate developments that occurred in the year to which the report relates.

Annuitant: A person who purchases an annuity to receive fixed payments therefrom.

Annuity: A agreement that guarantees a series of payments in exchange for a lump sum investment.

Arbitrage:  The simultaneous purchase of security on one exchange and the sale of the same security on another exchange which results in a profit.

Ask Price: The price at which a person is willing to sell his or her stock.

Assets: The property of a company.

Back-end Load: A sales commission or fee charged when mutual fund units are redeemed.

Balance Sheet: A financial statement showing all of the company’s assets, liabilities and shareholders' equity as at a particular point in time.

Bank Rate: In Canada, this is the rate at which the Bank of Canada makes short-term loans to chartered banks and other financial institutions, and which acts as a benchmark for prime rates set by financial. institutions.

Basis Point: One hundredth of one per cent (0.01%) of yield.

Bear:  A person who believes market or share prices will go down

Bear Market: A financial market that is declining.

Beta:   A statistical indicator used to measure a stock’s risk or volatility relative to the market. The market’s beta is always 1.0. In theory, a beta higher than 1.0 indicates that the stock will rise to a greater extent than that of the market in a rising market; similarly, the stock will fall to a greater extent in a falling market. A beta lower than 1.0 indicates that the stock will usually change to a lesser extent than that of the market.
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Bid Price: The price at which a person is willing to buy a stock.

Blue Chip: A reference to high grade equity securities which have strong investment qualities.

Board Lot: A standard number of shares for trading transactions. This number varies with the price level of the security. Usually, a board lot is 100 shares when the price of the stock is equal or greater than $1.00.
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Bond: A long-term debt instrument under which a company promises to pay a specified amount of interest and to repay the principal amount on a specified maturity date.

Book Value: Refers to the equity or net worth of the firm, calculated by assets minus its liabilities.

Book Value Per Share:
The value of a share of common stock, obtained by dividing the company’s net worth by the number of outstanding shares.

Bull: A person who believes market or share prices will rise.

Bull Market: A financial market that is rising.

Callable: A right of a company of preferred shares or bonds to repurchase, or "call" those securities at a stated price. Also known as redeemable securities.

Canada Savings Bond: A bond issued each year by the Canadian federal government which can be cashed in at any time for their full face value.

Capital Cost Allowance: A taxation term, equivalent to depreciation, that allows the company to expense each year a portion of the original price of an asset as a recognition of the wearing away of such asset.

Capital Gain: A gain that results when a capital asset is sold at a price higher than its original purchase price.

Capital Loss: The loss that results when a capital asset is sold at a price lower than its original purchase price.

Capital Stock: The shares of a company, both common and preferred.

Capitalize: The recording of an expenditure as an asset rather than an expense which is then written off over time.

Cash Equivalent: Assets that are generally viewed as being able to be converted quickly into cash such as receivables, Treasury bills, short-term commercial paper, etc.

Cash Flow Per Share: This ratio is obtained by dividing earnings after taxes and depreciation, by the number of a outstanding shares of a company.

Central Bank: A body established by a government to regulate currency and monetary policy. In Canada, the central bank is the Bank of Canada, in the US, it is the Federal Reserve Bank and in England it is the Bank of England.

Closed-end Fund: A fund company that issues a fixed number of shares. Its shares are not redeemable, but are bought and sold on stock exchanges or the over-the-counter market.  Supply and demand determines the price of the closed-end fund.

Collateral:  Assets pledged by a company to secure repayment of a debt.

Commercial Paper: A negotiable corporate promissory note with a term of a few days to a year. It is generally not secured by company assets.

Commission:  A broker’s fee in given for assistance in buying or selling securities.

Common Shares Outstanding: This is the number of shares issued minus the shares held in treasury.

Confirmation: A printed acknowledgment of a purchase or sale of security sent by the brokerage firm to the investor within a day of execution of the purchase or sale order.

Cum Dividend: Literally means with dividend. Buyers of shares quoted cum dividend will receive an upcoming already declared dividend. The opposite of ex dividend.

Cumulative Preferred Shares: Preferred shares which state that if a dividend is not paid in any year, the unpaid dividend will cumulate and be paid before any dividends may be paid on common shares.

Current Assets: Cash and assets which could be converted into cash within a year.

Current Liabilities:  A debt which is normally due within a year.

Day order:  An order placed for the purchase or sale of securities that is only valid for the day given.

Debenture: A bond which is unsecured, that is, is not backed by any pledge of assets of the company but is solely supported by the general credit of the issuing corporation.

Debt-to-Equity Ratio: The ratio found by dividing long-term debt by the equity (all assets minus debts).

Depreciation: Systematic charges against earnings to write off an asset.

Dilution: Reducing the actual or potential earnings per share by issuing more shares.

Director:  A person elected by a company’s shareholders to set and manage the company's overall policies. The Directors appoint officers such as the President to manage the day to day operations of the company.

Discount Bond: A bond whose value is less than its face amount.

Discount Broker:  A stockbroker who charges a smaller commission than brokers with full service brokerages, but provides no investment advice. The broker merely takes and executes your orders.

Diversification:  The strategy of buying securities in different investment and industry types, risk levels, and companies in order to reduce the loss from any one company, investment or industry.

Dividend: An amount of money per-share declared by a company's board of directors to be distributed among shareholders. For preferred shares, it is generally a fixed amount. For common shares, the directors have the discretion as to whether dividends should be paid.

Dividend yield: The yield found by dividing the annual dividends per share by the price per share.

Dollar Cost Averaging: A principle of investing which involves purchasing equal amounts for investment at regular intervals with the expectation of reducing the average share cost by purchasing more shares in periods of lower share prices and fewer shares in periods of higher share prices.

Dow Jones Industrial Average (DJIA):  An indicator showing generally how well the market is going, found by averaging the prices of 30 industrial blue-chip stocks trading in the New York Stock Exchange.

Earnings Statement: A financial statement showing the income and expenses of the corporation for a specific period of time. Also known as profit and loss statement or an income statement.

Earnings Per Share: Obtained by dividing the net income of the company by the number of outstanding common shares.

Equity or Shareholder Equity: The net worth of a company obtained by subtracting total liabilities from total assets. Also called Net worth.

Escrowed Shares:  Shares which are entitled to vote and received dividends but which cannot be sold while being held in escrow without the approval from the applicable securities commission.

Ex Dividend or Rights:  Literally means without dividend. The opposite of cum dividend.

Ex Dividend Date: The cut-off date for receiving the last announced dividend for a given stock, by a new purchaser.

Extra Dividend: A dividend declared and paid in addition to a regular dividend.

Face value: The value of the security as it appears on the certificate or instrument.
Also known as the “par value”, “denomination”, and “nominal value”.

Fixed assets: Assets of a long-term nature, such as land and buildings that will not be converted into cash within a year.

Fixed Liability: Any corporate liability that will not be required to be paid within a year.

Float:  The number of shares the company has outstanding.

Front-end Load: A sales commission or fee charged on the purchase of mutual fund units.

Fundamental Analysis: A method of evaluating stocks based on fundamental factors set out in the company’s financial statements , such as company earnings.

Fully Diluted Shares:  The number of shares of common stock that would be outstanding if all convertible securities were converted to common shares.

Growth Stocks:  Shares of companies whose earnings are expected to increase at an above-average rate. Growth stocks are sometimes identified by their high price/earnings ratios and low yield.

Guaranteed Investment Certificates (GIC’s): A deposit instrument paying a predetermined rate of interest for a specified term, available from banks, trust companies and other financial institutions.

Hedge: A transaction intended to reduce the risk of loss from price fluctuations.

Holding Company: A company incorporated for the sole purpose of holding a controlling interest in one or more companies.

Income Statement: see  Earning Statement.

Index:  Statistical tools that measure the state of the stock market or the economy based on the performance of the stocks or other components.

Index Fund: A mutual fund that contains as its portfolio the same securities comprising a specific financial market index, in order to match the performance of the market.

Inflation: An economy in which prices of products and services are rising.

Insider trading:  The purchase or sales of shares in a public company by directors and officers of that public company based on information not known to the public or in contravention of the related securities legislation.

Issued Shares: The number of shares of a company outstanding.

Issuer: One who under writes (issues) and distributes a company's securities

Intangible Asset: An asset that has no physical substance such as goodwill.

Junk Bond: A high yield bond, rated BB or lower, that has a high default risk.

Lagging Indicators: A selection of statistical data, that on average, indicated highs and lows in the business cycle behind the economy as a whole.

Leading Indicators: A selection of statistical data, that on average, indicated highs and lows in the business cycle ahead of the economy as a whole.

Leverage: The financial advantage of an investment that controls property of greater value than the cash invested. Leverage is usually achieved through the use of borrowed money.

Liabilities: All debts or amounts owing by a company in the form of accounts payable, loans, mortgages and long-term debts.

Life Annuity: An annuity under which payments are guaranteed for the life of the annuitant.

Limit Order: An order to buy stock once the price has dropped below the price limit

Liquidity: Refers to the ease with which an investment may be converted to cash at a reasonable price.

Load: Commissions charged to holders of mutual fund units. (See sales charge.)

Long: Signifies ownership of securities. If a person is long 100 shares of Microsoft shares, he has 100 shares of Microsoft. Opposite to short.

Long-term Asset: A mutual fund that charges a commission to purchase its shares.

Long-term Debt: Debt that becomes due after more than one year.

Manipulation: Buying or selling a security to create a false impression of active trading or to raise or lower prices to induce the purchase or sale by others. The practice of manipulating a stock is illegal.

Margin: The amount paid by an investor when he uses credit to buy a security, the balance being loaned by his broker.

Marginal Tax Rate: The rate of tax on the last dollar of taxable income that you earn in any year. For example, if you are in the 50% tax bracket, every new dollar earned will be taxed at 50%.

Market Capitalization: The value of total stock held of a corporation determined by multiplying the number of outstanding common shares by the share price.

Market Index: A composite of stocks reflecting the market such as Toronto Stock Exchange 300 Composite Index (TSE 300) or the Dow Jones.

Market Order: An order to purchase or sell stock at a current prices.

Maturity: The date on which bond becomes due and must be repaid or redeemed.

Moving-Average Chart: A chart setting out the trend of a stock's average price over a period of time calculated by adding up the market prices of the stock over a number of days and then dividing by that same number of days.

Multiple: A synonym for the price earnings ratio of a company’s shares.

Mutual Fund: An investment entity that pools together shareholder or unit holder funds and invests in various securities depending on the nature of the fund. The units or shares are redeemable by the fund on demand by the investor. The market price of the units is based on the value of the underlying assets of the fund.

NASDAQ: The National Association of Securities Dealers Automated Quotations System where there is no trading floor and all orders are made through a computer network.)

Net Worth: The difference between total assets and total liabilities.

No-load Fund: A mutual fund that does not levy a charge or a fee for buying or selling its units.

Non-Cumulative: A preferred dividend that does not accrue if not paid in any year. The opposite of cumulative dividend.

No Par Value: A share that has no stated face value.

Odd lot: Any number of shares less than a board lot.

Open-end Fund: An open-end mutual fund that is constantly issuing and redeeming its units thereby having a varying number of outstanding units each day. Most mutual funds are open-ended.

Open Order: An order to a broker to buy or sell shares that is good until it is canceled or executed.

Option: The right to buy or sell a specific quantity of a security at a specific price within a certain period of time.

Over-the-counter Market: A securities market established for securities not listed on stock exchanges.

Paper Loss: The opposite of paper profit.

Paper Profit: An unrealized profit on a security still held. The profit only becomes realized with the security is sold.

Par Value: The face value of a bond, preferred shares or common shares. Also known as the denomination or face value.

Pari Passu: Literally means on an equal basis.

Payout Ratio:  The ratio obtained by dividing the dividends per share by earnings per share. Gives an indication of how well earnings support dividends.

Piggy Back Warrants: A second series of warrants acquired by holders on exercise of warrants sold as part of a unit.

Portfolio: All the securities which an investor owns.

Preferred Share: A share with a preferred claim ahead of common shareholders on assets of the corporation in the event of bankruptcy or liquidation and ahead in claiming dividends.

Premium: The amount by which a bond's selling price exceeds its face value.

Present Value: The current value of an amount to be received in the future.

Price Earnings Ratio: The market price of a common share divided by its earnings per share for one year. (This ratio reflects what investors think of the corporations earnings’ potential)

Prime Rate: The interest rate that chartered banks charge to their most credit-worthy borrowers.

Private Corporation: A corporation which does not offer it shares stock for public sale and only traded or sold privately.

Profit Taking:  Selling a stock to take a profit.

Prospectus: The document containing key information of a corporation given to the public at the time the corporation makes an offer of new issue of securities to the public.

Proxy: Written authorization given by a shareholder to someone else who need not be a shareholder to represent him and vote his shares at a shareholders’ meeting.

Public Corporation: A corporation which offers stock for public sale. A public corporation is regulated in respect of what it must disclose to the public.

Put Option:  The right given to a buyer to sell stock at a specified price within a specified period of time

Price, 52 week High: The highest price the stock traded at in the last 12 months.

Price, 52 week Low: The lowest price the stock traded at in the last 12 months.

Quotation or Quote:  The highest bid to buy and the lowest offer to sell a security at any point in time.

Rally: An improvement in the market following a decline; the opposite of a reaction.

Range: The high and low prices, or high and low bids and offers, recorded during a specified time (i.e. daily, weekly, yearly).

Reaction: A decline in the market following a price upswing.  The opposite of rally.

Redeemable: Preferred shares or bonds that give the issuing corporation an option to repurchase the shares or bonds at a stated price.

Restrictive Shares:  Shares which have all rights of common shares except the right to vote.

Retained Earnings: The accumulated profits of a company. Any loss in any year will go toward reducing retained earnings shown on the balance sheet.

Retractable: Bonds or preferred shares that allow the holder to require the issuer to redeem the bonds or shares before the maturity date.

Return on Equity (ROE): This return is obtained by dividing the company’s net income by its net assets. It measures the amount a corporation earns on its investments

Rights: Options granted to shareholders to purchase additional shares directly from the company.

Risk: The possibility of loss or that a security price will fall.

Scalp:  To trade on the market for small gains. Scalping normally involves buying and selling a position quickly, usually within the same day, hour or even a few minutes.

Seat: The term for membership on a stock exchange.

Securities: A reference to stock or bonds.

Securities and Exchange Commission (SEC):
The federal agency that regulates the sale of securities in the United States.

Securities Commissions: In Canada, each province has a commission that regulates the sale of security in each of the provinces.

Shares: A document evidencing ownership in a company. The terms "share" and "stock" are used interchangeably.

Shareholder: An owner of shares of a corporation. Also known as a stockholder.

Shareholders' Equity: The amount of a corporation's assets belonging to its shareholders (both common and preferred).

Short Position:  A person in the market who has more trades sold than bought as a result of short selling.

Short Selling:  The sale of security which the seller does not own. The sale is made in the belief that the stock price will fall at which point the seller will buy to cover his short sale.

Stock Dividend: A dividend paid in shares of stock as a substitute for cash.

Stockbroker: A broker who buys and sells stocks and other securities for his customers for a commission

Stockholder: A owner of shares of stock; also referred to as shareholder.

Stock Split: The dividing of shares which results in increased shares of a corporation but at a proportionately lower price. For example, a person who has 100 shares worth $10 each, after a split of 2 to 1, would have 200 shares worth $5 each. The value of shares held would therefore remain the same, $1000.

Stop-limit Order:  An order placed with a stockbroker to buy or sell at a certain price or better during a limited period of time

Stop-loss Order:  An order placed with a stockbroker to buy or sell a designated stock once a designated price has been reached (This order limits the amount an investor can lose on that investment.)

Spread: The difference between the rates at which money is deposited in a financial institution and the higher rates at which the money is lent out. Also, the difference between the bid and ask price for a security.

Stock Options: Rights to purchase a corporation's stock at a specified price.

Straddle Order:  An order to buy and sell an equal number of puts and calls -  each with the same underlying interest and having the same exercise price and expiry date.

Strip Bonds: Describes bonds whose interest coupons have been removed. The holder of the strip bond is entitled to its par value at maturity, but not the annual interest payments.

Technical Analysis: An aid to predict future stock prices based on historical trends of trading volume, price changes and other market indicators.

Treasury Bill (T-bill): A certificate representing a non -interest bearing government debt with a term not exceeding one year. Treasury bills are sold at a discount and the return is the difference between the discount price and par value.

Treasury Shares:  Authorized but unissued stock of a corporation or previously issued shares that have been re-acquired by the corporation.

Trading Range: The range of prices within which a stock is traded

Underwriter: An investment firm that purchases shares from the corporation issuing the shares for resale to other investment firms or the public or acts as an agent for such corporation to sell such shares to the public.

Unsecured Debt: Bonds that are not backed by assets of a company, but by only the company’s credit worthiness.

Valuation:  The process of determining the current value of stock or other assets

Value Line Index: An index representing 1700 equally-weighted companies from the NYSE, AMEX, and the over-the-counter markets

Volume: The number of shares traded during a specified period of time.

Warrant: A certificate that entitles the holder to buy shares in a company at a stated price over a specified period.

Yield: Annual rate of return received on investments. In the case of dividends, the yield is calculated by dividing the dividend by the share price. In the case of a bond, it is the interest paid on the bond divided by the bond price.

Yield to Maturity: The annual rate of return an investor would receive if a bond were held until maturity.

Yield Curve:  The relationship among the yields of bonds of the same quality but different maturities.

Zero Coupon Bond: A bond that pays no interest but is sold at a discount of its face value. At maturity the holder will receive the face value.

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