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Glossary
The following glossary contains definitions to hundreds of common and not so common investment terms. (Note: These are simplified definitions for the purposes of this web site. Investors should not rely solely on these to develop their understanding of the stock market.)
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Acceptance Paper |
A term for short-term promissory notes issued by sales finance companies to fund loans to consumers for cars, appliances, etc.
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Accounts Payable |
Money owed by a company for goods or services purchased that is payable within one year. A current liability on the balance sheet.
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Accounts Receivable |
Money owed to a company for goods or services it has sold for which payment is expected within one year. A current asset on the balance sheet.
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Accrued Interest |
Interest accumulated on a bond or debenture since the last interest payment date.
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Additional Offering |
An offering that is subsequent to an initial public offering and adds to the outstanding number of shares a company has issued previously.
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Administrators |
The term used to describe generally the regulatory authorities.
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Affiliated Company |
A company with less than 50% of its shares owned by another corporation, or one whose stock, with that of another corporation, is owned by the same controlling interests.
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Agent |
An investment dealer operates as an agent when it acts on behalf of a buyer or a seller of a security and does not itself own title to the securities at any time during the transactions. See also Principal.
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American Depository Receipts (ADR's) |
A system devised by the American investment community whereby the original stock certificate of a foreign security is registered in the name of an American trust company or a U.S. bank and held in safekeeping by them. The trust company or bank then issues receipts against this stock, and these are traded as ADR's.
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American Option |
An option that can be exercised at any time during the option's lifetime. See also European Option.
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Amortization |
Gradually writing off the value of an intangible asset over a period of time. Commonly applied to items such as goodwill, improvements to leased promises, or expenses of a new stock or bond issue.
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Annual Information Form (AIF) |
A Document which contains information, required by law, which is not included in a mutual fund or other company's simplified prospectus or annual financial statements. Investors do not have to be given a copy of the AIF but the prospectus must state that it is available on request.
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Annual Report |
The formal financial statements and reports on operations issued by a company to its shareholders after its fiscal year-end.
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Ask |
the price at which shares of a given stock are being offered for sale.
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Balance Sheet |
A financial statement showing a company's assets, liabilities and shareholder's equity on a given date.
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Bankrupt |
The legal status of an individual or company which is unable to pay its creditors and whose assets are therefore administered for its creditors by a Trustee in Bankruptcy.
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Basis Point |
A phrase used to describe differences in levels, for example bond yields where one basis point represents one-hundredth of a percentage point.
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Bear |
One who expects that the market generally or the market price of a particular security will decline.
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Bear Market |
A declining market.
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Bid |
The price which investors are offering to purchase shares of a stock.
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Blue Sky |
A slang term for laws that various Canadian provinces and American states have enacted to protect the public against securities frauds. The term blue skied is used to indicate that a new issue has been cleared by a securities commission and may be distributed.
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Board Lot |
A regular trading unit which has been uniformly decided upon by stock exchanges.
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Bond |
A certificate evidencing a debt on which the issuer promises to pay the holder a specified amount of interest for a specified length of time, and to repay the loan on its maturity.
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Book Value |
The amount of net assets belonging to the owners of a business (or shareholders of a company) based on balance sheet values.
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Buy Order |
A request to have your broker acquire shares of a stock for you, at a set price and volume that you have defined.
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Broker |
A securities firm or a duly registered individual associated with one. The broker does not usually own the securities that it buys and sells, but acts as agent for the buyer or seller and charges a commission for its services.
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Bull |
One who expects that the market generally or the market price of a particular security will rise.
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Bull Market |
A rising market.
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Capital |
Has two distinct but related meanings. To an economist it means machinery, factories, and inventory required to produce other products. To an investor, it means the total of financial assets.
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Capital Gain or Loss |
The profit or loss resulting from the sale of a capital asset.
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Capital Stock |
All shares representing ownership of a company, including preferred as well as common.
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Cash Flow |
A company's net income for a stated period plus any deductions that are not paid out in actual cash, such as depreciation and amortization, deferred income taxes, and minority interest.
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Certificate |
The document evidencing ownership of a bond, stock or other security.
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Class A and Class B Stock |
Class A stock generally has prior claim over Class B for a stated amount of dividends or assets, but without voting rights; Class B usually has voting rights but no priority as to dividends or assets. Note that these distinctions do not always apply.
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Commission |
The fee charged by a stock broker for buying or selling securities.
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Commodity |
A product used for commerce that is traded on an organized exchange. A commodity could be an agricultural product such as canola or wheat, or a natural resource such as oil or gold.
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Common Stock |
Securities representing ownership in a company and carrying voting priviledges.
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Continuous Disclosure |
A Reporting Issuer must issue a press release as soon as a material change occurs in its affairs and, in any event, within ten days.
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Contributed Surplus |
A component of shareholders' equity which originates from sources other than earnings, such as the initial sale of stock above par value.
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Corporation or Company |
A form of business organization created under provincial or federal statutes which has a legal identity separate from its owners. The corporation's owners (shareholders) have no personal liabilities for its debts.
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Current Assets |
Cash and assets which in the normal course of business would be converted into cash, usually within a year, e.g. accounts receivable, inventories.
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Current Liabilities |
Money owed and due to be paid within a year, e.g. accounts payable.
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Day Order |
An order to buy or sell a security valid only for the day the order is given.
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Debt |
Money borrowed from lenders for a variety of corporate purposes. The borrower pays interest for the use of the money and is obligated to repay it at a set date.
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Delist |
Removal of a security's listing from a stock exchange.
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Depletion |
Refers to consumption of natural resources which are part of a company's assets. Producing oil, mining and gas companies deal in products that cannot be replenished and as such are known as wasting assets.
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Depreciation |
Systematic charges against earnings to write off the cost of an asset over its estimated useful life because of wear and tear through use, action of the elements, or obsolescence.
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Dilution |
Reducing the actual or potential earnings per share by issuing more shares or giving options to obtain them.
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Discount |
The amount by which a preferred stock or bond sells below its par value.
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Discount Broker |
A stock broker who will not provide personalized portfolio advice, but will charge cheaper commission fees, and will make a variety of order-entry vehicles available to clients, such as via computer or by automated telephone system.
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Diversification |
Spreading investment risk by buying different securities in different companies in different kinds of businesses and/or locations.
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Dividend |
An amount distributed out of a company's profits to its shareholders in proportion to the number of shares they hold.
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Duration |
The number of days which your buy or sell order will remain active for. The range is generally from one trading day to two weeks, though this may differ between brokers.
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Earnings or Income Statement |
A financial statement which shows a company's revenues and expenditures resulting in either a profit or loss during a financial period.
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Earnings Per Share |
The portion of net income for a period attributable to a single common share of a company.
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Equity or Shareholder's Equity |
Ownership interest of common and preferred stockholders in a company. The difference between the assets and liabilities of a company which is sometimes called net worth.
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Escrowed Shares |
Outstanding shares of a company which may not be bought or sold unless special approval is obtained from the appropriate stock exchange or securities commission.
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Fill |
When the total number of shares of an open order is traded, in complete fulfillment of the total volume of the order.
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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.
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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.
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Fixed Asset |
A tangible long-term asset such as land, building or machinery, held for use rather than for processing or resale.
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Fixed Charges |
A company's expenses, such as debt interest, which are not directly related to the volume of business.
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Full Service Broker |
A broker who will give personalized portfolio advice, but their commission fees are very high.
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Fundamental Analysis |
Security analysis based on fundamental facts about a company as revealed through its financial statements and an analysis of economic conditions that affect the company's business.
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