Common term for a government treasury bill, which is a short-term government debt issue.
The process by which the assets of an investment portfolio are changed, on a short-term basis, to take advantage of perceived differences in relative values of the various asset classes. For example, shifting a portion of the portfolio's Growth assets from shares of a utility company to shares of an oil and gas company because you believe inflation is rising, which in turn will push interest rates higher, thereby hurting the profits of the utility, but helping the profits of the oil and gas shares.
An offer made to security holders of a company to purchase their voting securities which, together with the offering individual's already owned securities, will total over 20% of the outstanding voting securities of the company. For federally incorporated companies, the equivalent requirement is more than 10% of the outstanding voting shares of the target company.
Target Asset Allocation is used by investors when they follow an investment approach that uses an asset allocation strategy.
An asset allocation strategy starts by setting target allocations for various asset classes (bonds, stocks, preferred shares, cash, etc), then investing in and rebalancing the portfolio back to the original Target Asset Allocations when they deviate significantly from the initial settings due to differing returns from various assets.
For example, an investor might determine their portfolio should be invested 65% in Fixed Income investments, 30% in Growth investments and 5% in Cash or Cash Equivalents. The 65%, 30%, 5% allocations are said to be the portfolio's Target Asset Allocation.
Although income tax is paid by most wage or income earners, the rate of income tax paid increases as income exceeds certain amounts, called brackets.
Tax credits reduce taxes payable to the same extent for all taxpayers, regardless of their income level and marginal tax rate. Deductions from taxable income, however, are more valuable as your income and tax rate increases.
Deductible expense that reduces taxable income for businesses or individuals before the amount of income tax payable is calculated.
Tax liability measures the percentage of a fund that is exposed to capital gains should the positions in the fund be sold. In other words, it indicates what proportion of the fund is accounted for by unrealized capital gains. Tax liability is calculated by comparing the book value of the underlying securities in a fund with the current market value of each security. The bigger the gap, the higher the potential capital gains exposure.
This is an investment that offers tax savings in some form, such as immediate deductions, credits or income deferral.
According to the Canada Revenue Agency, "Your taxable income is the amount you use to calculate your federal tax on your Schedule 1 and your provincial or territorial tax on Form 428." Your Taxable Income is the amount entered in Line 260 of your income tax return. This amount includes all taxable income before non-refundable income tax credits, such as the Basic Personal Amount, Age Amount, Spouse/Partner Amount, Dependant Amount, CPP/QPP Contributions, Employment Insurance Premiums, Tuition/Education Amounts, Medical Expenses, etc.
Market or security analysis through the study of price movement and trading activity by charts or graphs. Unlike fundamental analysis, the intrinsic or perceived value of the security is not considered.
These are companies that provide integrated telecommunication services primarily using fixed-line telecommunication networks, alternative carriers who provide communication and high-density data transmission services primarily through a high bandwidth/fibre-optic cable network, and providers of cellular or wireless telecommunication services including paging services.
A type of deposit with a financial institution that's repaid to you at a specified time (e.g., 90 days or one year) and at a specified interest rate.
A deposit instrument most commonly available from chartered banks requiring a minimum investment at a predetermined rate of interest for a stated term. The interest rate varies according to the amount invested and the term to maturity, but is competitive with comparable alternative investments. A reduced interest rate usually applies if funds are withdrawn prior to maturity.
A market in which there are comparatively few bids to buy or offers to sell, or both. The phrase may apply to a single security or to the entire stock market. In a thin market, price fluctuations between transactions are usually larger than when the market is liquid. A thin market in a particular stock may reflect lack of interest in that issue, or a limited supply of the stock.
A client order that specifies the time during which it can be executed.
The amount that the current market price of a right, warrant or option exceeds its intrinsic value. Intrinsic value is the amount by which the market price of a security exceeds the price at which the warrant, right or option may be exercised. The intrinsic value of a put is calculated as the amount by which the market price of the underlying security is below the exercise price.
The obligation for companies to promptly release to the news media any favorable or unfavorable corporate information which is of a material nature. This obligation is imposed by the securities administrators on companies. Broad dissemination of this news allows all investors to trade the company's securities with the same knowledge about the company as insiders.
An advertisement that announces a securities offering and gives the name of the issuer, the type of security, the underwriters, and where investors can obtain additional information.
The top-down approach in investing is to begin the selection process with an analysis of the economy and the equity markets. This analysis would result in the selection of certain markets (for international equity funds) or industries (for domestic equity funds), which will fare better than others. A pure top-down approach would then dictate that the portfolio invest in a representative grouping of those markets or securities, perhaps select an industry and then buy the three largest companies in that industry with minimal research into the individual companies. A pure top-down international equity manager might select the countries in which the fund should invest and buy an index fund. More often, top-down analysis is combined with bottom-up securities selection.
Tracking errors occur when an ETF or mutual fund performance does not equal the performance of the index it is trying to match.
For example, you might buy an ETF that tracks the S&P/TSX 60 Index. After the first year the S&P/TSX 60 Index might be up 6.0% in value, but the ETF you bought might only be up 5.0%. In this case, your ETF is not performing exactly like it's underlying index, giving you 1.0% less return on your investment than you anticipated. This difference in returns,1.0%, is the tracking error.
A 1% difference in return might not seem large, but the impact of small tracking errors is amplified the longer you hold the investment due to a compounding affect.
Contributing factors to tracking error can be management fees, trading and operating expenses and the timing of ETF re-balancing.
In reality, no indexing strategy can perfectly match the performance of the index or benchmark, and the tracking error quantifies the degree to which the strategy differed from the index or benchmark.
- Employee of an investment dealer who executes buy and sell orders for the dealer and its clients either on a stock exchange or the over-the-counter market.
- The term is also used to describe a client who buys and sells frequently with the objective of short-term profit.
Most investors have heard of or are familiar with the term Management Expense Ratios (MER), but few know about a mutual fund or exchange traded fund's Trading Expense Ratio (TER).
The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of average daily net asset value during the year.
The TER is a cost investors pay above and beyond the standard MER. So to estimate the total cost of an investment you must add the TER and MER together.
Suspension of trading in a security while material news from the issuer is being spread. A trading halt gives all investors equal opportunity to hear the news and make any appropriate trade decisions.
Different par values make up trading units for the over-the-counter market. For example, one trading unit of Government of Canada treasury bills is $250,000 par value, while one trading unit of provincial bonds and guarantees is $25,000 par value.
A trailer fee is the annual service commission paid by the mutual fund company to the mutual fund sales representative. This fee is paid as long as you hold units in the fund. These fees generally range between 0.25% and 1% and are paid out of the fund's management expenses. A trailer fee is a service commission. This means the salesperson should be providing the purchaser of the funds with ongoing services such as answering any questions you may have about the performance of your fund(s), and other related matters.
The date on which the purchase or sale of a security takes place.
A trust company appointed by a company to keep a record of the names, addresses and number of shares held by its shareholders. Frequently the transfer agent also distributes dividend cheques.
Short-term government debt, usually issued in trading units of $250,000 and sold chiefly to large institutional investors. Treasury bills do not pay interest but are sold at a discount and mature at par (100). The difference between the purchase price and par at maturity represents the purchaser's income in lieu of interest. In Canada such gain is taxed as interest income in the purchaser's hands.
Authorized but unissued stock of a company, or previously issued shares that have been re-acquired by the corporation.
The Treynor measure is very similar to the Sharpe ratio except that rather than using standard deviation as the denominator in the equation, Treynor substitutes beta, thereby introducing volatility relative to an index rather than just looking at the volatility of the fund. Treynor is therefore more appropriate for a portfolio that is quite diversified relative to the market within which it operates.
The formula for the Treynor measure is the fund's rate of return minus the risk free rate of return, divided by the fund's beta.
Slang industry term for the last hour of a Friday on which quarterly contracts expire in stock futures, stock options and index options. Program traders adjust their positions on these dates and the result can cause volatility for equities. This volatility can create a domino effect on currency and fixed-income markets.
A financial institution, similar to a bank, that can take deposits and make loans; trust companies often provide other specialized services that banks cannot, like administering estates and pension plans.
A person who holds property and securities in trust for another person. The trustee does not own the property, but adminsters the property for the benefit of the property's owner.
The TSX Global Sector classification scheme comprises 10 industry sectors (Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Healthcare, Financials, Information Technology, Telecommunication Services and Utilities). Sector weights are calculated from the market value weight of each stock in the fund or portfolio. The combined weight of stocks that cannot be identified or classified is shown as "Unclassified."
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