F

Question 1

Face Value

Answer 1

The value of a bond or debenture that
appears on the face of the certificate. Face
value is ordinarily the amount the issuer
will pay at maturity. Face value is no
indication of market value.

Question 2

Fee-Based Accounts

Answer 2

A type of account that bundles various
services into a fee based on the client’s assets
under management, for example, 1% to 3%
of client assets

Question 3

Fiduciary Responsibility

Answer 3

The responsibility of an investment advisor,
mutual fund salesperson or fi nancial
planner to always put the client’s interests
fi rst. The fi duciary is in a position of trust
and must act accordingly

Question 4

Final Good

Answer 4

A finished product, one that is purchased

by the ultimate end user.

Question 5

Final Prospectus

Answer 5

The prospectus which supersedes the
preliminary prospectus and is accepted for
fi ling by applicable provincial securities
commissions. The fi nal prospectus shows all
required information pertinent to the new
issue and a copy must be given to each
fi rst-time buyer of the new issue

Question 6

Financial Intermediary

Answer 6

An institution such as a bank, life insurance
company, credit union or mutual fund
which receives cash, which it invests, from
suppliers of capital.

Question 7

Financing

Answer 7

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. A term synonymous with 
underwriting

Question 8

First-In-First-Out (FIFO)

Answer 8

Inventory items acquired earliest are sold

first.

Question 9

First Mortgage Bonds

Answer 9

The senior securities of a company as they
constitute a first charge on the company’s
assets, earnings and undertakings before
unsecured current liabilities are paid.

Question 10

Fiscal Agent

Answer 10

An investment dealer appointed by a
company or government to advise it in
financial matters and to manage the
underwriting of its securities.

Question 11

Fiscal Year

Answer 11

A company’s accounting year. Due to the
nature of particular businesses, some
companies do not use the calendar year for
their bookkeeping. A typical example is the
department store that finds December 31
too early a date to close its books after the
Christmas rush and so ends its fiscal year on
January 31.

Question 12

Fixed Asset

Answer 12

A tangible long-term asset such as land,
building or machinery, held for use rather
than for processing or resale. A statement
of fi nancial position category

Question 13

Fixed Exchange Rate Regime

Answer 13

A country whose central bank maintains
the domestic currency at a fixed level against
another currency or a composite of other
currencies.

Question 14

Fixed-Floater Preferred

Answer 14

See Delayed Floater.

Question 15

Fixed-Income Securities

Answer 15

Securities that generate a predictable stream
of interest or dividend income, such as
bonds, debentures and preferred shares

Question 16

Fixed-Reset Preferred

Answer 16

See Delayed Floater

Question 17

Flat

Answer 17

Means that the quoted market price of a
bond or debenture is its total cost (as
opposed to an accrued interest transaction).
Bonds and debentures in default of interest
trade fl at.

Question 18

Floating Exchange Rate

Answer 18

A country whose central bank allows market
forces alone to determine the value of its
currency, but will intervene if it thinks the
move in the exchange rate is excessive or
disorderly.

Question 19

Floating Rate

Answer 19

A term used to describe the interest
payments negotiated in a particular contract.
In this case, a floating rate is one that is
based on an administered rate, such as the
Prime Rate. For example, the rate for a
particular note may be 2% over Prime. See
also Fixed Rate.

Question 20

Floating-Rate Debentures

Answer 20

A type of debenture that offers protection
to investors during periods of very volatile
interest rates. For example, when interest
rates are rising, the interest paid on floating
rate debentures is adjusted upwards every
six months.

Question 21

Floor Trader

Answer 21

Employee of a member of a stock exchange,
who executes buy and sell orders on the
floor (trading area) of the exchange for the
firm and its clients.

Question 22

Forced Conversion

Answer 22

When a company’s stock rises in value above
the conversion price a company may force
the convertible security holder to exchange
the security for stock by calling back the
security. Faced with receiving a lower call
price (par plus a call premium) or higher
valued shares the investor is forced to
convert into common shares.

Question 23

Foreign Bonds

Answer 23

If a Canadian company issues debt securities
in another country, denominated in that
foreign country’s currency, the bond is
known as a foreign bond. A bond issued in
the U.S. payable in U.S. dollars is known as
a foreign bond or a “Yankee Bond.” See also
Eurobond.

Question 24

Foreign Exchange Rate Risk

Answer 24

The risk associated with an investment in a
foreign security or any investment that pays
in a denomination other than Canadian
dollars, the investor is subject to the risk
that the foreign currency may depreciate in
value.

Question 25

Foreign Pay

Answer 25

A Canadian debt security issued in Canada
but pays interest and principle in a foreign
currency is known as a foreign pay bond.
This type of security allows Canadians to
take advantage of possible shifts in currency
values.

Question 26

Forward

Answer 26

A forward contract is similar to a futures
contract but trades on an OTC basis. The
seller agrees to deliver a specified commodity
or financial instrument at a specified price
sometime in the future. The terms of a
forward contract are not standardized but
are negotiated at the time of the trade.
There may be no secondary market.

Question 27

Frictional Unemployment

Answer 27

Unemployment that results from normal
labour turnover, from people entering and
leaving the workforce and from the ongoing
creation and destruction of jobs.

Question 28

Front-End Load

Answer 28

A sales charge applied to the purchase price
of a mutual fund when the fund is
originally purchased.

Question 29

Front Running

Answer 29

Making a practice, directly or indirectly, of
taking the opposite side of the market to
clients, or effecting a trade for the advisor’s
own account prior to effecting a trade for a
client

Question 30

Full Employment

Answer 30

The level of unemployment due solely to
both frictional and structural factors, or
when cyclical unemployment is zero.

Question 31

Fully Diluted Earnings Per Share

Answer 31

Earnings per common share calculated on
the assumption that all convertible securities
are converted into common shares and all
outstanding rights, warrants, options and
contingent issues are exercised.

Question 32

Fundamental Analysis

Answer 32

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. See also Technical
Analysis.

Question 33

Funded Debt

Answer 33

All outstanding bonds, debentures, notes
and similar debt instruments of a company
not due for at least one year.

Question 34

Futures

Answer 34

A contract in which the seller agrees to
deliver a specifi ed commodity or fi nancial
instrument at a specifi ed price sometime in
the future. A futures contract is traded on a
recognized exchange. Unlike a forward
contract, the terms of the futures contract
are standardized by the exchange and there
is a secondary market. See also Forwards