Glossary attachment

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Call option

An option contract in which the buyer has the right, but not the obligation, to purchase an underlying security at a fixed price, prior to an agreed-upon expiry date. Call options are usually purchased by investors who believe that the underlying security will go up in value.

Call premium

The difference between the call price and the par value of a callable bond or callable preferred share.

Call Protection

Shares that cannot be called for a specific period of time after they have been issued.

Callable

A bond or preferred share that can be called by the issuer, at a specific price, usually when interest rates have declined since the bond or preferred share was originally issued.

Capital

(1) From an economic perspective, it represents the inputs into production, such as machinery, factories and buildings.

(2) From a company perspective, it represents the equity interest in a business or net worth (the difference between the total assets and total liabilities), consisting primarily of common and preferred shares.

(3) From an investor's perspective, it represents all that is owned by an individual, including home, securities, cash and any other investments.

(4) In an investment sense, it is the total money available through savings for investment.

Capital Assets

(1) For accounting purposes, fixed assets of a business including land, buildings, machinery or furniture, not intended for sale.

(2) For tax purposes a capital asset is a stock, bond, mutual fund, option, real estate and other property, primarily purchased as a long-term investment, with income producing capabilities.

Capital Cost Allowance

Allowing for the depreciation in value of a fixed asset for tax purposes.

Capital Gain (or Capital Appreciation or Capital Growth)

Results when a profit is realized from the difference between the purchase price of a capital asset (stocks, bonds, options, mutual funds, real estate and other property) and the selling price of that asset.

Capital Loss

Results when a loss is realized from the difference between the purchase price of a capital asset (stocks, bonds, options, mutual funds, real estate and other property) and the selling price of that asset.

Capital Stock

All the outstanding shares in a corporation, including preferred and common shares.

Cash Equivalents

Assets that can be converted quickly into cash without a loss and include T-bills, commercial paper, short-term bonds and short-term paper.

Cash Flow

A company's reported net income generated from its operations, plus amounts charged for depreciation, depletion, amortization, deferred income taxes and minority interest.

Certificate

A document representing ownership of a certain number of shares or fixed income investments such as bonds.

Closed-End fund

An investment fund that issues a specific number of shares; its capitalization is fixed. The shares are not redeemable, but are readily transferable and trade on either a stock exchange or the over-the-counter market.

Collateral

Securities or other property pledged by a borrower as a guarantee for repayment of a loan.

Commercial Paper

Short-term promissory note, issued by well-established corporations to raise funds to meet short-term needs, traded in the money market.

Commission

A fee charged by a stock broker or financial advisor or mutual funds sales representative for buying or selling securities as agent on behalf of an investor.

Common Shares

A class of stock that represents ownership in a company. They usually carry a voting privilege and entitle owners to share in the company's profits.

Company

See Corporation.

Confirmation

A printed document identifying details of an investor's purchase and/ or sale of a security. The confirmation is usually sent out by the broker, investment dealer or fund company.