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Financial terms: S-U

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Charges that investors pay to mutual fund companies, which are then distributed to sales representatives and/or financial advisors who recommend the company’s funds.
Income not spent. In other words, money in excess of what a household or company needs to meet day-to-day expenses.
Any market — e.g., a stock market — where investors buy and sell previously issued securities (including equities, fixed-income securities and derivatives) from each other. In contrast, the primary market is where the initial public offering is made.
A marketplace that allows previously issued securities, such as equities, fixed-income securities and derivatives, to be bought and sold between investors. See also “stock exchange.”
Risks not related to the markets that are often associated with investing in hedge funds, such as leverage and liquidity constraints.
A bond secured by a specific asset used as collateral in the event of default, if the company fails to make its coupon payments or return the bond’s principal at maturity.
Financial instruments in the form of physical certificates or electronic records representing ownership of investment.
Provincial and territorial securities administrators responsible for enforcing provincial and territorial securities acts. Collectively, the commissions form the Canadian Securities Administrators (CSA), but the power remains with each individual commission.
A fungible (able to be bought or sold) and tradable financial instrument used to raise capital in public and private markets. There are four main types of securities: debt securities, equity securities, derivative securities and hybrid securities, which are a combination of debt and equity.
Evaluation of a security’s risk and return characteristics.
An insurance investment fund, similar to a mutual fund, that typically offers a principal guarantee. Units of segregated funds are purchased based on their net asset value, similar to a mutual fund. They are sometimes called variable deferred annuities.
A trailing commission, paid on an ongoing basis for servicing an investment holding.
A calculation used to estimate the annualized yield of money market mutual funds. It assumes that the yield generated over the last seven days remains constant going forward for one year. It also assumes that the rate applies to weekly compounding of returns. See also “effective yield” and “yield.”
A person who owns shares of a company’s stock.
The equity that remains after liabilities are subtracted from the assets.
Represent an ownership stake in the company. Shares have no maturity date, and their value is based on the size and performance of the underlying company. See also “equities” and “stock.”
A negative investment holding, created by an investor selling an investment that they do not own. A short position would be entered if the investor expects the value of the investment to fall. Negative positions are said to be short. See also “long position.”
The action of selling securities that the investor does not own, designed to profit from the falling price of a stock, which is done by borrowing shares, selling them on the open market and later repurchasing the shares, hopefully at a lower price, and returning them to the shareholder.
A fixed-income fund investing primarily in money-market securities and government bonds with maturity dates of less than five years.
A legal document that provides investors with essential information about a mutual fund, including the fund’s investment objectives, risk factors, fees and method of distribution.
Investment funds made up of equities issued by smaller companies with lower market values. As a result, small-cap funds experience higher volatility and risk but also offer the potential for higher returns.
Also known as social investment, a socially responsible investment is considered socially responsible due to the nature of the business conducted by the company being invested in.
A phase of a business cycle when economic growth slows but does not turn negative and inflation remains low. This is the ideal scenario when an economy slows down.
Savings from retail, institutional and foreign investors.
An investor who seeks high returns by investing in riskier investments.
A registered retirement savings plan (RRSP) that allows one spouse to contribute into the other spouse’s account and therefore provides tax-savings opportunities through tax splitting.
Canadian common-stock mutual funds that earn a combination of capital gains and dividend income.
A detailed financial statement showing the total income kept in a business each year.
A detailed financial statement showing revenue and expenses, including unrealized gains and losses, that result in either a profit or a loss.
A detailed financial statement showing the assets, liabilities and equity of a company on a specific date.
A statement that clearly outlines what a mutual fund’s portfolio mandate is and, therefore, what its manager can invest in.
Represents an ownership interest in a company or corporation. Stocks have no maturity date, and their value is based on the size and performance of the underlying company. See also “equities” and “shares.”
A marketplace where buyers and sellers of stocks and other securities trade shares of publicly listed companies. See also “secondary market.”
A portfolio construction strategy that sets a particular mix of assets as a target and aims to maintain that mix over time. These target allocations are based on, but not limited to, factors likethe investor’s risk tolerance, time horizon, investment objects and the expected risk and return of the different asset classes.
A requirement that investment recommendations be suitable for the client. Under the suitability requirement, a registered representative must incorporate all available information about a client and properly examine the specifics of a security to determine whether it is appropriate for that investor. In certain cases, such as when dealing with accredited investors, there are exemptions to the suitability requirement.
The amount of a good or service available at a given price. See also “demand.”
The risk faced by all securities during falling markets or times of broad market swings (volatility).
A regular, automatic withdrawal of investment units by an investor. The money is generally used to supplement a pension or other fixed-income withdrawal.


A statement of trust income, allocations and designations that reports an individual’s investment income generated from trust accounts or mutual funds held in non-registered accounts for tax purposes. See also “T5 statement” and “T4 statement.”
A statement that summarizes income and deductions from an individual’s employment for tax purposes. See also “T3 statement” and “T5 statement.”
A statement of investment income that reports an individual’s investment income, including interest, dividends and foreign income, for tax purposes. See also “T3 statement” and “T4 statement.”
An investment earning within a registered plan that is tax-free until withdrawn
A government-sponsored savings plan that shelters investment income from tax while its inside the account. Withdrawals from a TFSA are entirely tax-free.
The time to maturity for an asset or liability. For mortgages, it refers to the period of time before terms and conditions can be renegotiated.
Time between a fixed-income security’s issuance and the date at which the principal is repaid.
A rate-of-return calculation, also called a geometric mean, that factors income and compounding into the equation for a more accurate measure of performance. Time-weighted portfolio returns focus on the returns for the investments themselves and do not account for the timing of individual deposits and withdrawals from the investments.
The value of all assets — such as investments and real estate — owned by an individual or business, excluding any liabilities. See also “total liabilities.”
The total amount of debt that an individual or business owes, including unpaid bills, loans and mortgages on property. See also “total assets.”
The brokerage fees and commissions paid to buy and sell securities within a portfolio or mutual fund.
A fee charged to an investor who switches assets from one mutual fund company to another.
A government-issued short-term debt security that does not pay interest; instead, an investor buys it at a discount, then redeems it for face value (par) at maturity.
For a mutual fund, this legal document outlines the fund’s principal investment objectives, investment policy, restrictions, custodial details and fund structure. For bonds, the trust deed outlines the agreement details between the bondholder and bond issuer.
An entity, often a trust company, appointed to protect the security behind the bonds and to make certain the deed’s covenants are honoured. In the case of a segregated fund, it’s the entity the administers the fund’s assets.
The percentage of a fund’s total assets traded during a year.


The process by which an investment dealer buys a new equity investment and then bears the risk of selling it for a desired price when it is brought to market. In the case of a “best efforts underwriting,” the dealer does not guarantee a partial or complete sale of the offering.
An order to buy or sell an investment initiated by a client, and not by the advisor.

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