Chapter
1
Key Term
personal finance
(personal financial
planning)
1
personal financial plan
1
per capita debt
1
opportunity cost
1
Financial Planners
Standards Council
(FPSC)
1
1
1
1
budget planning
(budgeting)
assets
liabilities
net worth
1
liquidity
1
money management
1
emergency fund
1
credit management
1
risk
1
risk management
1
insurance planning
1
investment risk
Definition
The process of planning your
spending, financing, and investing
activities, while taking into account
uncontrollable events such as death
or disability, in order to optimize your
financial situation over time.
A plan that specifies your financial
goals, describes the spending,
financing, and investing activities that
are intended to achieve those goals
over time, and the risk management
strategies that are required to protect
against uncontrollable events such as
death or disability.
The amount of debt each individual in
Canada would have if total debt
(consumer debt plus mortgages) was
spread equally across the population.
What you give up as a result of a
decision.
A not-for-profit organization that was
created to benefit the public through
the development, enforcement, and
promotion of the highest competency
and ethical standards in financial
planning.
The process of forecasting future
income, expenses, and savings goals.
What you own.
What you owe; your debt.
The value of what you own minus the
value of what you owe.
Access to ready cash, including
savings and credit, to cover shortterm or unexpected expenses.
Decisions regarding how much
money to retain in liquid form and how
to allocate the funds among shortterm investment instruments.
A portion of savings that you have
allocated to short-term needs such as
unexpected expenses in order to
maintain adequate liquidity.
Decisions regarding how much credit
to obtain to support your spending
and which sources of credit to use
Exposure to events (or perils) that can
cause a financial loss.
Decisions about whether and how to
protect against risk.
Determining the types and amount of
insurance needed to protect your
assets.
Uncertainty surrounding not only the
Sound File
1
risk tolerance
1
retirement planning
1
estate planning
2
2
personal cash flow
statement
net cash flows
2
budget
2
personal balance sheet
2
liquid assets
2
household assets
2
bonds
2
stocks
2
mutual funds
2
2
real estate
rental property
2
current liabilities
2
long-term liabilities
3
excise taxes
3
3
personal income taxes
T4 slip
potential return on an investment but
also its future potential value.
A person's ability to accept risk,
usually defined as a potential loss of
return and/or loss of capital.
Determining how much money you
should set aside each year for
retirement and how you should invest
those funds.
Determining how your wealth will be
distributed before and/or after your
death.
A financial statement that measures a
person's income and expenses.
Disposable (after-tax) income minus
expenses.
A cash flow statement that is based
on forecasted cash flows (income and
expenses) for a future time period.
A summary of your assets (what you
own), your liabilities (what you owe),
and your net worth (assets minus
liabilities).
Financial assets that can be easily
converted into cash without a loss in
value.
Items normally owned by a
household, such as a car and
furniture.
Certificates issued by borrowers to
raise funds.
Certificates representing partial
ownership of a firm.
Investment companies that sell units
to individuals and invest the proceeds
in an overall portfolio of investment
instruments such as bonds or stocks.
Rental property and land.
Housing or commercial property that
is rented out to others.
Personal debts that will be paid in the
near future (within a year).
Debt that will be paid over a period
longer than one year.
Special taxes levied on certain
consumer products such as
cigarettes, alcohol, and gasoline.
Taxes imposed on income earned.
A document provided to you by your
employer that displays your salary
and all deductions associated with
your employment with that specific
employer for the previous year. Your
employer is required to provide you
with a T4 slip by February 28.
3
Employment Insurance
(EI)
3
total income
3
interest income
3
dividend income
3
taxable capital gain
3
capital loss
3
allowable capital loss
3
capital gain
3
deduction
3
T4A slip
3
marginal tax rate
3
tax credits
3
refundable tax credit
3
average tax rate
3
non-refundable tax
credits
Government benefits that are payable
for periods of time when you are away
from work due to specific situations.
All reportable income from any
source, including salary, wages,
commissions, business income,
government benefits, pension income,
interest income, dividend income, and
capital gains received during the tax
year. Income received from sources
outside Canada is also subject to
Canadian income tax.
Interest earned from investments in
various types of savings accounts at
financial institutions; from investments
in debt securities such as term
deposits, GICs, and CSBs; and from
loans to other individuals, companies,
and governments.
Income received from corporations in
the form of dividends paid on stock or
on mutual funds that hold stock.
Dividend income represents the profit
due to part owners of the company.
The portion of a capital gain that is
subject to income tax. The portion
included in income is called the
inclusion amount and currently stands
at 50 percent.
Occurs when you sell an asset for a
lower price than you paid for it.
The portion of a capital loss that you
can deduct from taxable capital gains.
Money earned when you sell an asset
at a higher price than you paid for it.
An expense that can be deducted
from total income to determine
taxable income.
A document provided to you when
you receive income other than salary
income.
The percentage of tax you pay on
your next dollar of taxable income.
Specific amounts used directly to
reduce tax liability.
The portion of the credit that is not
needed to reduce your tax liability
(because it is already zero) may be
paid to you.
The amount of tax you pay as a
percentage of your total taxable
income.
The portion of the credit that is not
needed to reduce your tax liability will
not be paid to you and cannot be
3
clawback
3
tax planning
3
tax avoidance
3
tax evasion
4
money management
4
depository institutions
4
chartered banks
4
trust and loan companies
4
credit unions/caisses
populaires
4
non-depository
institutions
4
finance and lease
companies
4
mortgage companies
4
investment dealers
4
insurance companies
carried forward to reduce your tax
liability in the future.
Used to reduce (i.e., clawback) a
particular government benefit
provided to taxpayers who have an
income that exceeds a certain
threshold amount.
Involves activities and transactions
that reduce or eliminate tax.
A term used to describe the process
of legally applying tax law to reduce
or eliminate taxes payable in ways
that the CRA considers potentially
abusive of the spirit of the Income Tax
Act.
Occurs when taxpayers attempt to
deceive the CRA by knowingly
reporting less tax payable than what
the law obligates them to pay.
A series of decisions made over a
short-term period regarding income
and expenses.
Financial institutions that accept
deposits from and provide loans to
individuals and businesses.
Financial institutions that accept
deposits and use the funds to provide
business and personal loans. These
banks are federally incorporated.
Financial institutions that, in addition
to providing services similar to a
bank, can provide financial planning
services, such as administering
estates and acting as trustee in the
administration of trust accounts.
Provincially incorporated co-operative
financial institutions that are owned
and controlled by their members.
Financial institutions that do not offer
federally insured deposit accounts but
provide various other financial
services.
Non-depository institutions that
specialize in providing personal loans
or leases to individuals.
Non-depository institutions that
specialize in providing mortgage
loans to individuals.
Non-depository institutions that
facilitate the purchase or sale of
various investments by firms or
individuals by providing investment
banking and brokerage services.
Non-depository institutions that sell
insurance to protect individuals or
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mutual fund companies
4
financial conglomerates
4
cheque register
4
overdraft protection
4
stop payment
4
debit card
4
safety deposit box
4
automated banking
machine (ABM)
4
certified cheque
4
money orders and drafts
4
traveller's cheque
4
guaranteed investment
certificate (GIC)
firms from risks that can incur
financial loss.
Non-depository institutions that sell
units to individuals and use the
proceeds to invest in securities to
create mutual funds.
Financial institutions that offer a
diverse set of financial services to
individuals or firms.
A booklet in your chequebook where
you record the details of each
transaction you make, including
deposits, cheque writing, withdrawals,
and bill payments.
An arrangement that protects a
customer who writes a cheque for an
amount that exceeds their chequing
account balance; it is a short-term
loan from the depository institution
where the chequing account is
maintained.
A financial institution's notice that it
will not honour a cheque if someone
tries to cash it; usually occurs in
response to a request by the writer of
the cheque.
A card that is not only used for
identification for your bank, but also
allows you to make purchases that
are charged against an existing
chequing account.
A box at a financial institution in which
a customer can store documents,
jewellery, and other valuables. It is
secure because it is stored in the
bank's vault.
A machine individuals can use to
deposit and withdraw funds at any
time of day.
A cheque that can be cashed
immediately by the payee without the
payee having to wait for the bank to
process and clear it.
Products that direct your bank to pay
a specified amount to the person
named on them.
A cheque written on behalf of an
individual that will be charged against
a large, well-known financial
institution or credit card sponsor's
account.
An instrument issued by a depository
institution that specifies a minimum
investment, an interest rate, and a
maturity date.
4
Canada Savings Bonds
(CSBs)
4
money market funds
(MMFs)
5
credit
5
instalment credit
5
revolving open-end credit
5
credit reports
5
5
retail (or proprietary)
credit card
prestige cards
5
finance charge
5
consumer proposal
5
insolvent
5
trustee in bankruptcy
5
identity theft
5
shoulder surfing
5
dumpster diving
5
skimming
Short-term to medium-term, highquality debt securities issued by the
Government of Canada.
Accounts that pool money from
individuals and invest in securities
that have short-term maturities, such
as one year or less.
Funds provided by a creditor to a
borrower that the borrower will repay
with interest or fees in the future.
Credit provided for specific
purchases, with interest charged on
the amount borrowed. It is repaid on a
regular basis, generally with blended
payments.
Credit provided up to a specified
maximum amount based on income,
debt level, and credit history; interest
is charged each month on the
outstanding balance.
Reports provided by credit bureaus
that document a person's credit
payment history.
A credit card that is honoured only by
a specific retail establishment.
Credit cards, such as gold cards or
platinum cards, issued by a financial
institution to individuals who have an
exceptional credit standing.
The interest and fees you must pay
as a result of using credit.
An offer made by a debtor to his or
her creditors to modify his or her
payments.
A person who owes at least $1000
and is unable to pay his or her debts
as they come due.
A person licensed to administer
consumer proposals and bankruptcies
and manage assets held in trust.
Occurs when an individual uses
personal, identifying information
unique to you, such as your Social
Insurance Number, without your
permission for their personal gain.
Occurs in public places where you
can be readily seen or heard by
someone standing close by.
Occurs when an identity thief goes
through your trash for discarded items
that reveal personal information that
can be used for fraudulent purposes.
Occurs when identity thieves steal
your credit or debit card number by
copying the information contained in
5
pretexting
5
phishing
5
pharming
6
loan contract
6
amortize
6
maturity or term
6
collateral
6
secured loan
6
6
unsecured loan
payday loan
6
annual percentage rate
(APR)
6
simple interest
6
add-on interest method
6
home equity loan
6
equity
6
equity of a home
6
second mortgage
6
prime rate
the magnetic strip on the card.
Occurs when individuals access
personal information under false
pretenses.
Occurs when pretexting happens
online.
Similar to phishing, but targeted at
larger audiences, it directs users to
bogus websites to collect their
personal information.
A contract that specifies the terms of
a loan as agreed to by the borrower
and the lender.
To repay the principal of a loan (the
original amount borrowed) through a
series of equal payments. A loan
repaid in this manner is said to be
amortized.
With respect to a loan, the life or
duration of the loan.
Assets of a borrower that back a loan
in the event that the borrower
defaults. Collateral is a form of
security for the lender.
A loan that is backed or secured by
collateral.
A loan that is not backed by collateral.
A short-term loan provided in advance
of receiving a paycheque.
Measures the finance expenses
(including interest and all other
expenses) on a loan annually.
Interest on a loan computed as a
percentage of the existing loan
amount (or principal). Compounding
is not taken into account.
A method of determining the monthly
payment on a loan; it involves
calculating the interest that must be
paid on the loan amount, adding
together interest and loan principal,
and dividing by the number of
payments.
A loan in which the equity in a home
serves as collateral.
The market value of your home less
any outstanding mortgage balance
and/or debts held by others that are
secured against your property.
The market value of a home minus
the debt owed on the home.
A secured mortgage loan that is
subordinate (or secondary) to another
loan.
The interest rate a bank charges its
6
student loan
7
Multiple Listing Service
(MLS)
7
pre-approval certificate
7
gross debt service ratio
(GDSR)
7
total debt service ratio
(TDSR)
7
market analysis
7
conventional mortgage
7
high ratio mortgage
7
7
7
vendor take-back
mortgage
home inspection
interest adjustment
7
amortization
7
mortgage term
7
closed mortgage
7
open mortgage
7
fixed-rate mortgage
best customers.
A loan provided to finance a portion of
a student's expenses while pursuing
post-secondary education.
An information database of homes
available for sale through realtors who
are members of the service.
Provides you with a guideline on how
large a mortgage you can afford
based on your financial situation.
Your mortgage-related debt
payments; including mortgage loan
repayments, heating costs, property
taxes, and any condo fees; divided by
your total monthly gross household
income.
Your mortgage-related debt payments
plus all other consumer debt
payments divided by your total
monthly gross household income.
An estimate of the price of a home
based on the prices of similar homes
in the area.
A mortgage where the down payment
is at least 25 percent of the home's
appraised value.
A mortgage where the down payment
is less than 25 percent of the home's
appraised value.
A mortgage where the lender is the
seller of the property.
A report on the condition of the home.
Occurs when there is a difference
between the date you take
possession of your home and the
date from which your lender
calculates your first mortgage
payment.
The expected number of years it will
take a borrower to pay off the entire
mortgage loan balance.
The period of time over which the
mortgage interest rate and other
terms of the mortgage contract will
not change.
Restricts your ability to pay off the
mortgage balance during the
mortgage term unless you are willing
to pay a financial penalty.
Allows you to pay off the mortgage
balance at any time during the
mortgage term.
A mortgage in which a fixed interest
rate is specified for the term of the
mortgage.
7
variable-rate mortgage
(VRM)
7
mortgage refinancing
8
8
8
premium
peril
underwriters
8
insurance agent
8
8
captive (or exclusive)
insurance agent
independent insurance
agent
insurance policy
8
auto insurance policy
8
third party liability
8
bodily injury liability
coverage
8
property damage liability
coverage
8
accident benefits
coverage
8
uninsured motorist
coverage
8
underinsured motorist
coverage
8
collision insurance
8
comprehensive coverage
8
A mortgage where the interest
charged on the loan changes in
response to movements in a specific
market-determined interest rate. The
rate used is usually referred to as
prime. Lenders will add a percentage
to prime for the total mortgage rate.
Paying off an existing mortgage with a
new mortgage that has a lower
interest rate.
The cost of obtaining insurance.
A hazard or risk you face.
Employees of an insurance company
who determine the risk of specific
insurance policies and decide what
policies to offer and what premiums to
charge.
Represents one or more insurance
companies and recommends
insurance policies that fit customers'
needs.
Works for one particular insurance
company.
Represents many different insurance
companies.
Contract between an insurance
company and the policy owner.
Specifies the coverage provided by
an insurance company for a particular
individual and vehicle.
A legal term that describes the
person(s) who have experienced loss
because of the insured.
Protects you against liability
associated with injuries you cause to
others.
Protects against losses that result
when the policy owner damages
another person's property with his or
her car.
Insures against the cost of medical
care for you and other passengers in
your car.
Insures against the cost of bodily
injury when an accident is caused by
another driver who is not insured.
Insures against the additional cost of
bodily injury when an accident is
caused by a driver who has
insufficient coverage.
Insures against costs of damage to
your car resulting from an accident in
which the driver of your car is at fault.
Insures you against damage to your
car that results from something other
8
deductible
8
Facility Association
8
exclusion
8
homeowner's insurance
8
all perils coverage
8
named perils coverage
8
cash value policy
8
replacement cost policy
8
home inventory
8
personal property floater
8
tenant's insurance
8
umbrella personal liability
policy
9
health insurance
9
medicare
9
Canada Health Act
than a collision, such as floods, theft,
fire, hail, explosions, riots, vandalism,
and various other perils.
A set dollar amount that you are
responsible for paying before any
coverage is provided by your insurer.
Ensures that drivers unable to obtain
insurance with an individual company
are able to obtain the coverage they
need to operate their vehicles legally.
A term appearing in insurance
contracts or policies that describes
items or circumstances that are
specifically excluded from insurance
coverage.
Provides insurance in the event of
property damage, theft, or personal
and third party liability relating to
home ownership.
Protects the home and any other
structures on the property against all
events except those that are
specifically excluded by the policy.
Protects the home and any other
structures on the property against
only those events named in the
policy.
Pays you the value of the damaged
property after considering its
depreciation.
Pays you the actual cost of replacing
the damaged property.
Contains detailed information about
your personal property that can be
used when filing a claim.
An extension of the homeowner's
insurance policy that allows you to
itemize your valuables.
An insurance policy that protects your
possessions within a house,
condominium, or apartment that you
are renting.
A supplement to auto and
homeowner's insurance that provides
additional personal liability coverage.
A group of insurance benefits
provided to a living individual as a
result of sickness or injury.
An interlocking system of ten
provincial and three territorial health
insurance plans provided by the
governments, including the federal
government.
Establishes the criteria and conditions
related to insured health care services
9
insured health care
services
9
insured person
9
Canada Health and
Social Transfer (CHST)
9
disability income
insurance
9
indemnification
9
waiting period
9
long-term care insurance
10
life insurance
10
face amount
10
beneficiary
10
life insured
10
policy owner
10
term insurance
10
grace period
10
mortality rate
that provinces and territories must
meet in order to receive money from
the federal government for health
care.
Medically necessary hospital,
physician, and surgical-dental
services provided to insured persons.
An eligible resident of a province.
Does not include someone who may
be covered by other federal or
provincial legislation.
The largest federal transfer of money
to the provinces and territories,
providing them with cash payments
and tax transfers in support of health
care, post-secondary education,
social assistance, and social services,
including early childhood
development.
A monthly insurance benefit paid to
you in the event that you are unable
to work as a result of an injury or an
illness.
The concept of putting an insured
individual back into the same position
he or she was in prior to the event
that resulted in insurance benefits
being paid.
The period from the time you become
disabled until you begin to receive
disability income benefits.
Covers expenses associated with
long-term health conditions that cause
individuals to need help with everyday
tasks.
Insurance that provides a payment to
a specified beneficiary when the
insured dies.
The amount stated on the face of the
policy that will be paid on the death of
the insured.
The named individual who receives
life insurance payments upon the
death of the insured.
The individual who is covered in the
life insurance policy.
The individual who owns all rights and
obligations to the policy.
Life insurance that is provided over a
specified time period and does not
build a cash value.
The period the insurance company
extends to the policy owner before the
policy will lapse due to nonpayment.
The number of deaths in a population
10
underwriting
10
creditor insurance
10
creditor
10
decreasing term
insurance
10
group term insurance
10
permanent insurance
10
cost of insurance
10
cash value
10
death benefit
10
whole life insurance
10
limited payment policy
10
universal life insurance
10
non-forfeiture options
10
paid-up insurance
or in a subgroup of the population.
The process of evaluating an
insurance application based on the
applicant's age, sex, smoking status,
driving record, and other health and
lifestyle considerations and then
issuing insurance policies based on
the responses.
Term life insurance where the
beneficiary of the policy is a creditor.
An individual or company to whom
you owe money.
A type of creditor insurance, such as
mortgage life insurance, where the life
insurance face amount decreases
each time a regular payment is made
on debt that is amortized over a
period of time.
Term insurance provided to a
designated group of people with a
common bond that generally has
lower-than-typical premiums.
Life insurance that continues to
provide insurance for as long as
premiums are paid.
The insurance-related expenses
incurred by a life insurance company
to provide the actual death benefit,
sometimes referred to as the pure
cost of dying.
The portion of the premium in excess
of insurance-related and company
expenses that is invested by the
insurance company on behalf of the
policy owner.
The total amount paid tax-free to the
beneficiary upon the death of the
policy owner.
A form of permanent life insurance
that builds cash value based on a
fixed premium that is payable for the
life of the insured.
Allows you to pay premiums over a
specified period but remain insured
for life.
A form of permanent life insurance for
which you do not pay a fixed premium
and in which you can invest the cash
value portion in a variety of
investments.
The options available to a policy
owner who would like to discontinue
or cancel a policy that has cash value.
A permanent life insurance policy that
results from exercising a non-
10
term to 100 insurance
10
participating policy
10
non-participating policy
10
policy dividend
10
income method
10
budget method (or needs
method)
10
reinstatement
10
10
living benefits
(accelerated death
benefits)
renewability option
10
conversion option
10
riders
10
settlement options
10
lump sum settlement
10
instalment payments
settlement
10
interest payments
settlement
forfeiture option on a policy that has
accumulated cash value.
A form of permanent life insurance
designed for the sole purpose of
providing a benefit at death.
A life insurance policy that is eligible
to receive policy dividends.
A life insurance policy that is not
eligible to receive policy dividends.
A refund of premiums that occurs
when the long-term assumptions the
insurance company made with
respect to the cost of insurance,
company expenses, and investment
returns have changed.
Determines how much life insurance
is needed based on the policyholder's
annual income.
A method that determines how much
life insurance is needed based on the
household's future expected
expenses and current financial
situation.
The process of completing a
reinstatement application to restore a
policy that is in lapse status.
Benefits that allow the policyholder to
receive a portion of death benefits
prior to death.
Allows you to renew your policy for
another term once the existing term
expires.
Allows you to convert your term
insurance policy into a whole life
policy that will be in effect for the rest
of your life.
Options that allow you to customize a
life insurance policy to your specific
needs.
The ways in which a beneficiary can
receive life insurance benefits in the
event that the policyholder dies.
A single payment of all benefits owed
to a beneficiary upon the death of the
policyholder.
The payment of life insurance benefits
owed to a beneficiary as a stream of
equal payments over a specified
number of years.
A method of paying life insurance
benefits in which the insurance
company retains the amount owed to
the beneficiary for a specified number
of years and pays interest to the
beneficiary.
11
exchange traded fund
(ETF)
11
primary market
11
initial public offering (IPO)
11
secondary market
11
institutional investors
11
individual investors
11
day traders
11
growth stocks
11
value stocks
11
income stocks
11
common stock
11
preferred stock
11
range of returns
11
standard deviation
11
risk premium
11
default
11
asset allocation
11
portfolio
11
insider information
A portfolio of securities whose value
moves in tandem with a particular
stock index. Unlike a mutual fund,
these funds trade on an exchange or
stock market.
A market in which newly issued
securities are traded.
The first offering of a firm's shares to
the public.
A market in which existing securities
such as debt securities are traded.
Professionals responsible for
managing large pools of money, such
as pension funds, on behalf of their
clients.
Individuals who invest funds in
securities.
Investors who buy stocks and then
sell them on the same day.
Shares of firms with substantial
growth opportunities.
Stocks of firms that are currently
undervalued by the market for
reasons other than the performance
of the businesses themselves.
Stocks that provide investors with
periodic income in the form of large
dividends.
A certificate issued by a firm to raise
funds that represents partial
ownership in the firm.
A certificate issued by a firm to raise
funds that entitles shareholders to first
priority to receive dividends.
Returns of a specific investment over
a given period.
The degree of volatility in the stock's
returns over time.
An additional return beyond the riskfree rate you could earn from an
investment.
Occurs when a company borrows
money through the issuance of debt
securities and does not pay either the
interest or the principal.
The process of allocating money
across financial assets (such as
mutual funds, stocks, and bonds) with
the objective of achieving a desired
return while maintaining risk at a
tolerable level.
A set of multiple investments in
different assets.
Non-public information known by
employees and other professionals
11
correlation
11
income trust
11
real estate investment
trusts (REITs)
12
equity mutual funds
12
bond mutual funds
12
money market mutual
funds
12
marketability
12
liquidity
12
net asset value (NAV)
12
12
net asset value per unit
(NAVPU)
discount
12
no-load mutual funds
12
front-end load mutual
funds
12
back-end load mutual
funds
12
declining redemption
schedule
12
open-end mutual funds
12
closed-end funds
12
premium
that is not known by outsiders. It is
illegal to use insider information.
A mathematical measure that
describes how two securities' prices
move in relation to one another.
A flow-through investment vehicle that
generates income and capital gains
for investors.
Income trusts that pool investments
from individuals and use the proceeds
to invest in real estate.
Funds that sell units to individuals and
use this money to invest in stocks.
Funds that sell units to individuals and
use this money to invest in bonds.
Funds that sell units to individuals and
use this money to invest in cash and
investments that can be converted to
cash quickly (very liquid investments).
The ease with which an investor can
convert an investment into cash.
The ease with which the investor can
convert the investment into cash
without a loss of capital.
The market value of the securities
that a mutual fund has purchased
minus any liabilities and fees owed.
Calculated by dividing the NAV by the
number of units in the fund.
The amount by which a closed-end
fund's unit price in the secondary
market is below the fund's NAVPU.
Funds that sell directly to investors
and do not charge a fee.
Mutual funds that charge a fee at the
time of purchase, which is paid to
stockbrokers or other financial service
advisers who execute transactions for
investors.
Mutual funds that charge a fee if units
are redeemed within a set period of
time.
A fee schedule where the back-end
load charge reduces with each year
an investor holds the fund.
Funds that sell units directly to
investors and will redeem those units
whenever investors wish to "cash" in.
Funds that sell units to investors but
will not redeem these units; instead,
the fund's units are traded on a stock
exchange.
The amount by which a closed-end
fund's unit price in the secondary
market is above the fund's NAVPU.
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management expense
ratio (MER)
12
sector funds
12
index funds
12
global bond funds
12
exchange rate risk
12
market risk
12
hedge funds
12
interest rate risk
12
simplified prospectus
12
investment objective
12
investment strategy
13
balance sheet
13
income statement
13
current ratio
13
times interest earned
ratio
The annual expenses incurred by a
fund on a percentage basis,
calculated as annual expenses of the
fund divided by the net asset value of
the fund; the result of this calculation
is then divided by the number of units
outstanding.
Mutual funds that focus on stocks in a
specific industry or sector, such as
technology stocks.
Mutual funds that attempt to mirror
the movements of an existing equity
index.
Mutual funds that focus on bonds
issued by non-Canadian firms or
governments.
The risk that the value of a bond may
drop if the currency denominating the
bond weakens against the Canadian
dollar.
The susceptibility of a mutual fund's
performance to general market
conditions.
Limited partnerships that manage
portfolios of funds for wealthy
individuals and financial institutions.
The risk that occurs because of
changes in the interest rate. This risk
affects funds that invest in debt
securities and other income-oriented
securities.
A document that provides financial
information about a mutual fund,
including expenses and past
performance.
In a prospectus, a brief statement
about the general goal of the mutual
fund.
In a prospectus, a summary of the
types of securities that are purchased
by the mutual fund to achieve its
objective.
A financial statement that indicates a
firm's sources of funds and how it has
invested those funds as of a particular
point in time.
A financial statement that measures a
firm's revenues, expenses, and
earnings over a particular period of
time.
The ratio of a firm's short-term assets
to its short-term liabilities.
A measure of financial leverage that
indicates the ratio of the firm's
earnings before interest and taxes to
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inventory turnover
13
average collection period
13
asset turnover ratio
13
operating profit margin
13
net profit margin
13
return on assets
13
return on equity
13
financial leverage
13
debt ratio
13
economic growth
13
13
gross domestic product
(GDP)
fiscal policy
13
monetary policy
13
inflation
13
consumer price index
(CPI)
13
technical analysis
13
fundamental analysis
13
price–earnings (P/E)
method
its total interest payments.
A measure of efficiency; computed as
the cost of goods sold divided by
average daily inventory.
A measure of efficiency; computed as
accounts receivable divided by
average daily sales.
A measure of efficiency; computed as
sales divided by average total assets.
A firm's operating profit divided by
sales.
A measure of profitability that
measures net profit as a percentage
of sales.
A measure of profitability; computed
as net profit divided by total assets.
A measure of profitability; computed
as net profit divided by the owners'
investment in the firm (shareholders'
equity).
A firm's reliance on debt to support its
operations.
A measure of financial leverage that
calculates the proportion of total
assets financed with debt.
The growth in a country's economy
over a particular period.
The total market value of all products
and services produced in a country.
How the government imposes taxes
on individuals and corporations and
how it spends tax revenues.
Techniques used by the Bank of
Canada (central bank) to affect the
economy of the country.
The increase in the general level of
prices of products and services over a
specified period.
A measure of inflation that represents
the increase in the prices of consumer
products such as groceries,
household products, housing, and
gasoline over time.
The valuation of stocks based on
historical price patterns using various
charting techniques.
The valuation of stocks based on an
examination of fundamental
characteristics such as revenue,
earnings, and/or the sensitivity of the
firm's performance to economic
conditions.
A method of valuing stocks in which a
firm's earnings per share are
multiplied by the mean industry price–
13
price–sales (P/S) method
13
efficient stock market
13
inefficient stock market
13
stock exchanges
13
venture capital
13
market makers
13
demutualization
13
over-the-counter (OTC)
market
13
full-service brokerage firm
13
discount brokerage firm
13
ticker symbol
13
board lot
13
odd lot
13
market order
13
limit order
13
on-stop order
13
buy stop order
13
sell stop order
earnings (P/E) ratio.
A method of valuing stocks in which
the revenue per share of a specific
firm is multiplied by the mean industry
ratio of share price to revenue.
A market in which stock prices fully
reflect information that is available to
investors.
A market in which stock prices do not
reflect all public information that is
available to investors.
Facilities that allow investors to
purchase or sell existing stocks.
Refers to investors' funds destined for
risky, generally new businesses with
tremendous growth potential.
Securities dealers who are required to
trade actively in the market so that
liquidity is maintained when natural
market forces cannot provide
sufficient liquidity.
Refers to the transformation of a firm
from a member-owned organization to
a publicly owned, for-profit
organization.
An electronic communications
network that allows investors to buy
or sell securities.
A brokerage firm that offers
investment advice and executes
transactions.
A brokerage firm that executes
transactions but does not offer
investment advice.
The abbreviated term used to identify
a stock for trading purposes.
Shares bought or sold in multiples of
typically 100 shares. The size of the
board lot depends on the price of the
security.
Less than a board lot of that particular
stock.
An order to buy or sell a stock at its
prevailing market price.
An order to buy or sell a stock only if
the price is within limits that you
specify.
An order to execute a transaction
when the stock price reaches a
specified level; a special form of limit
order.
An order to buy a stock when the
price rises to a specified level.
An order to sell a stock when the
price falls to a specified level.
13
on margin
13
margin call
14
bonds
14
par value
14
debentures
14
call feature
14
convertible bond
14
extendible bond
14
put feature
14
yield to maturity
14
discount
14
premium
14
Government of Canada
bonds
Federal Crown
corporation bonds
14
14
provincial bonds
14
municipal bonds
14
corporate bonds
14
high-yield bonds
14
T-Bills
14
banker's acceptances
(BAs)
Purchasing a stock with a small
amount of personal funds and a
portion of the funds borrowed from a
brokerage firm.
A request from a brokerage firm for
the investor to increase the cash in
the account in order to return the
margin to the minimum level.
Long-term debt securities issued by
government agencies or corporations
that are collateralized by assets.
For a bond, its face value, or the
amount returned to the investor at the
maturity date when the bond is due.
Long-term debt securities issued by
corporations that are secured only by
the corporation's promise to pay.
A feature on a bond that allows the
issuer to repurchase the bond from
the investor before maturity.
A bond that can be converted into a
stated number of shares of the
issuer's stock at a specified price.
A short-term bond that allows the
investor to extend the maturity date of
the bond.
A feature on a bond that allows the
investor to redeem the bond at its
face value before it matures.
The annualized return on a bond if it
is held until maturity.
A bond that is trading at a price below
its par value.
A bond that is trading at a price above
its par value.
Debt securities issued by the
Canadian government.
Debt securities issued by corporations
established by the federal
government.
Debt securities issued by the various
provincial governments.
Long-term debt securities issued by
local government agencies.
Long-term debt securities issued by
large firms.
Bonds issued by less stable
corporations that are subject to a
higher degree of default risk.
Short-term debt securities issued by
the Canadian government and sold at
a discount.
Short-term debt securities issued by
large firms that are guaranteed by a
bank.
14
commercial paper
14
mortgage backed
securities
14
strip bonds
14
real return bonds
14
risk premium
14
default risk
14
call (prepayment) risk
14
interest rate risk
14
interest rate strategy
14
passive strategy
14
15
maturity matching
strategy
pensionable earnings
15
pension assignment
15
defined-benefit pension
plan
15
vested
15
defined-contribution
pension plan
15
pension adjustment
A short-term debt security issued by
large firms that is guaranteed by the
issuing firm.
Represent a pool of CMHC-insured
residential mortgages that are issued
by banks and other financial
institutions.
Long-term debt securities issued by
the Government of Canada that do
not offer coupon payments.
Long-term debt securities issued by
the Government of Canada that
protect you from inflation risk.
The extra yield required by investors
to compensate for default risk.
Risk that the borrower of funds will
not repay the creditors.
The risk that a callable bond will be
called.
The risk that a bond's price will
decline in response to an increase in
interest rates.
Selecting bonds based on interest
rate expectations.
Investing in a diversified portfolio of
bonds that are held for a long period
of time.
Investing in bonds that will generate
payments to match future expenses.
The amount of income you earn
between the year's basic exemption
(YBE) and the year's maximum
pensionable earnings (YMPE).
Occurs when a married or commonlaw couple decides to share their CPP
retirement pensions in order to reduce
their income taxes.
An employer-sponsored retirement
plan that guarantees you a specific
amount of income when you retire,
based on your salary and years of
employment.
Having a claim to the money in an
employer-sponsored retirement
account that has been reserved for
you upon your retirement, even if you
leave the company.
An employer-sponsored retirement
plan where the contribution rate, not
the benefit amount, is based on a
specific formula.
Calculates the remaining annual
contribution room available to an
individual after taking into account
any employer-sponsored pension
15
normal retirement age
15
registered retirement
savings plan (RRSP)
15
spousal RRSP
15
Home Buyers' Plan
(HBP)
15
Lifelong Learning Plan
(LLP)
15
locked-in retirement
account (LIRA)
15
term annuity
15
life annuity
15
registered annuities
15
reverse mortgage
16
estate
16
estate planning
16
beneficiaries (heirs)
16
16
intestate
preferential share
16
English form will
16
will
plan contributions.
The age by which employees are
entitled to receive 100 percent of the
pension income they are eligible for.
A type of private pension that enables
you to save for your retirement on a
tax-deferred basis.
A type of RRSP where one spouse
contributes to the plan and the other
spouse is the beneficiary, or
annuitant.
A tax-free RRSP withdrawal option
that is available to Canadians who
would like to buy their first home.
A tax-free RRSP withdrawal that is
available to full-time students who
temporarily would like to use an
RRSP to finance their education.
A private pension plan that is created
when an individual transfers vested
money from an employer-sponsored
pension plan.
A financial contract that provides
regular payments until a specified
year.
A financial contract that provides
regular payments for one's lifetime.
Annuities that are created using
assets from a registered plan, such as
an RRSP.
A secured loan that allows older
Canadians to generate income using
the equity in their homes without
having to sell this asset.
The assets of a deceased person
after all debts are paid.
The act of planning how your wealth
will be allocated on or before your
death.
The persons specified in a will to
receive part of an estate.
The condition of dying without a will.
The dollar value of estate assets that
will be distributed to the surviving
spouse before assets are distributed
among all potential beneficiaries.
A will that contains the signature of
the testator and of two witnesses who
were present when the testator
signed the will.
A legal document that describes how
your estate should be distributed
upon your death. It can also identify a
preferred guardian for any surviving
minor children.
16
notarial will
16
holograph will
16
executor (personal
representative)
16
trustee
16
bequest
16
residue
16
letter of last instruction
16
codicil
16
probate
16
rights or things
16
trust
16
16
settlor
inter vivos trust
16
revocable inter vivos trust
16
irrevocable inter vivos
trust
16
16
testamentary trust
living will
16
limited (non-continuing)
A formal type of will that is commonly
used in Quebec and is completed in
the presence of a notary (lawyer).
A will that is written solely in the
handwriting of the testator and that
does not require the signature of any
witnesses.
The person designated in a will to
execute your instructions regarding
the distribution of your assets.
An individual or organization that is
responsible for the management of
assets held in trust for one or more of
the beneficiaries of a will.
A gift that results from the instructions
provided in a will.
Refers to the amount remaining in an
estate after all financial obligations,
such as the payment of debts,
expenses, taxes, and bequests, have
been fulfilled.
A supplement to a will that can
describe preferences regarding
funeral arrangements and indicate
where any key financial documents
are stored.
A document that specifies changes in
an existing will.
A legal process that declares a will
valid and ensures the orderly
distribution of assets.
Income that was owed to the
deceased taxpayer but not paid at the
time of death, but that would have
been included in income had the
taxpayer not died.
A legal document in which one
person, the settlor, transfers assets to
a trustee, who manages them for
designated beneficiaries.
The person who creates a trust.
A trust in which you assign the
management of your assets to a
trustee while you are living.
An inter vivos trust that can be
dissolved.
An inter vivos trust that cannot be
changed, although it may provide
income to the settlor.
A trust created by a will.
A simple legal document in which
individuals specify their preferences if
they become mentally or physically
disabled.
A legal document granting a person
power of attorney
16
general power of attorney
16
enduring (continuing)
power of attorney
16
durable power of attorney
for health care
17
ordinary annuity
17
compounding
17
future value of interest
factor (FVIF)
17
discounting
17
present value of interest
factor (PVIF)
17
annuity due
17
timelines
17
future value interest
factor for an annuity
(FVIFA)
17
present value interest
factor for an annuity
(PVIFA)
the power to make specific decisions
for you in the event that you are
temporarily incapacitated.
A legal document granting a person
the immediate power to make any
decisions and/or commitments for
you, with specific limitations.
A legal document granting a person
the immediate power to make any
decisions and/or commitments for
you, even when you are mentally
incapacitated.
A legal document granting a person
the power to make specific health
care decisions for you.
A stream of equal payments that are
received or paid at equal intervals in
time at the end of a period.
The process of earning interest on
interest.
A factor multiplied by today's savings
to determine how the savings will
accumulate over time.
The process of obtaining present
value.
A factor multiplied by a future value to
determine the present value of that
amount.
A series of equal cash flow payments
that occur at the beginning of each
period.
Diagrams that show payments
received or paid over time.
A factor multiplied by the periodic
savings level (annuity) to determine
how the savings will accumulate over
time.
A factor multiplied by a periodic
savings level (annuity) to determine
the present value of the annuity.