G, H, I Flashcards
Good Delivery Form
When a security is sold it must be delivered
to the broker properly endorsed, not
mutilated and with (if any) coupons
attached. To avoid these difficulties and as a
general practice most securities are held in
street form with the broker.
Good Faith Deposit
A deposit of money by the buyer or seller of
a futures product which acts as a financial
guarantee as to the fulfilment of the
contractual obligations of the futures
contract. Also called a performance bond or
margin.
Good Through Order
An order to buy or sell that is good for a
specifi ed number of days and then is
automatically cancelled if it has not been
fi lled
Good Till Cancelled Order
An order that is valid from the date entered
until the close of business on the date
specified in the order. If the order has not
been filled by the close of the market on
that date, it is cancelled. This type of order
can be cancelled or changed at any time.
Goodwill
Generally understood to represent the value
of a well-respected business – its name,
customer relations, employee relations,
among others. Considered an intangible
asset on the statement of financial
position.
Government Securities
Distributors
Typically an investment dealer or bank that
is authorized to bid at Government of
Canada debt auctions
Greensheet
Highlights for the fi rm’s sales representatives
the salient features of a new issue, both pro
and con in order to successfully solicit
interest to the general public. Dealers
prepare this information circular for
in-house use only
Gross Domestic Product (GDP)
The value of all goods and services
produced in a country in a year.
Gross Profi t Margin
A profitability ratio that shows the
company’s rate of profit after allowing for
cost of sales.
Growth Stock
Common stock of a company with excellent
prospects for above-average growth; a
company which over a period of time seems
destined for above-average expansion
Guaranteed Amount
The minimum amount payable under
death benefi ts or maturity guarantees
provided for under the terms of the
segregate fund contract
Guaranteed Bonds
Bonds issued by a crown corporation but
guaranteed by the applicable government as
to interest and principal payments.
Guaranteed Income Supplement
GIS
A pension payable to OAS recipients with
no other or limited income
Guaranteed Investment Certificate
GIC
A deposit instrument most commonly
available from trust companies, requiring a
minimum investment at a predetermined
rate of interest for a stated term. Generally
nonredeemable prior to maturity but there
can be exceptions.
Guaranteed Minimum Withdrawal Benefit Plans (GMWB)
A GMWB plan is similar to a variable
annuity. With a GMWB, the client
purchases the plan, and the GMWB option
gives the planholder the right to withdraw a
certain fixed percentage (7% is typical) of the
initial deposit every year until the entire
principal is returned, no matter how the
fund performs.
Halt in Trading
A temporary halt in the trading of a security
to allow signifi cant news to be reported and
widely disseminated. Usually the result of a
pending merger or a substantial change in
dividends or earnings
Hedge Funds
Lightly regulated pools of capital in which
the hedge fund manager invests a signifi cant
amount of his or her own capital into the
fund and whose offering memorandum
allows for the fund to execute aggressive
strategies that are unavailable to mutual
funds such as short selling.
Hedging
A protective manoeuvre; a transaction
intended to reduce the risk of loss from
price fl uctuations
High Water Mark
Used in the context of how a hedge fund manager is compensated. The high water mark sets the bar above which the fund manager is paid a portion of the profi ts earned for the fund.
Holding Period Return
A transactional rate of return measure that
takes into account all cash fl ows and
increases or decreases in a security’s value
for any time frame. Time frames can be
greater or less than a year
Hypothecate
To pledge securities as collateral for a loan.
Referred to as collateral assignment or
hypotec in Québec for segregated funds.
ICE Futures Canada (formerly the
Winnipeg Commodity Exchange)
An exchange that trades agricultural futures
and options exclusively
Income Splitting
A tax planning strategy whereby the
higher-earning spouse transfers income to
the lower-earning spouse to reduce taxable
income.
Income Tax Act (ITA)
The legislation dictating the process and
collection of federal tax in Canada,
administered by Canada Revenue Agency.
Income Trusts
A type of investment trust that holds
investments in the operating assets of a
company. Income from these operating
assets fl ows through to the trust, which in
turn passes on the income to the trust
unitholders.
Index
A measure of the market as measured by a
basket of securities. An example would be
the S&P/TSX Composite Index or the S&P
500. Fund managers and investors use a
stock index to measure the overall direction
and performance of the market.
Index-Linked GICs
A hybrid investment product that combines
the safety of a deposit instrument with
some of the growth potential of an equity
investment. They have grown in popularity,
particularly among conservative investors
who are concerned with safety of capital
but want yields greater than the interest on
standard interest bearing GICs or other
term deposits
Indexing
A portfolio management style that involves
buying and holding a portfolio of securities
that matches, closely or exactly, the
composition of a benchmark index.
Individual variable insurance
contract (IVIC)
The term used in the IVIC Guidelines to
describe a segregated fund contract.
Infl ation
A generalized, sustained trend of rising
prices.
Infl ation Rate
The rate of change in prices. See also
Consumer Price Index.
Infl ation Rate Risk
The risk that the value of fi nancial assets
and the purchasing power of income will
decline due to the impact of infl ation on
the real returns produced by those fi nancial
assets.
Information Circular
Document sent to shareholders with a
proxy, providing details of matters to come
before a shareholders’ meeting
Initial Public Offering (IPO)
A new issue of securities offered to the
public for investment for the very fi rst time.
IPOs must adhere to strict government
regulations as to how the investments are
sold to the public.
Initial Sales Charge
A commission paid to the fi nancial adviser
at the time that the policy is purchased.
This type of sales charge is also known as an
acquisition fee or a front-end load.
Insider
All directors and senior offi cers of a
corporation and those who may also be
presumed to have access to nonpublic or
inside information concerning the company;
also anyone owning more than 10% of the
voting shares in a corporation. Insiders are
prohibited from trading on this information.
Insider Report
A report of all transactions in the shares of a
company by those considered to be insiders
of the company and submitted each month
to securities commissions.
Instalment Debentures
A bond or debenture issue in which a
predetermined amount of principal matures
each year.
Instalment Receipts
A new issue of stock sold with the obligation
that buyers will pay the issue price in a
specifi ed series of instalment payments
instead of one lump sum payment. Also
known as Partially Paid Shares.
Institutional Client
A legal entity that represents the collective
fi nancial interests of a large group. A
mutual fund, insurance company, pension
fund and corporate treasury are just a few
examples.
Intangible Asset
An asset having no physical substance (e.g.,
goodwill, patents, franchises, copyrights).
Integrated Asset Allocation
An asset allocation strategy that refers to
an all-encompassing strategy that includes
consideration of capital market expectations
and client risk tolerance.
Interest
Money charged by a lender to a borrower
for the use of his or her money
Interest Coverage Ratio
A debt ratio that tests the ability of a
company to pay the interest charges on its
debt and indicates how many times these
charges are covered based upon earnings
available to pay them
Interest Rate Risk
The risk that changes in interest rates will
adversely affect the value of an investor’s
portfolio. For example, a portfolio with a
large holding of long-term bonds is
vulnerable to signifi cant loss from changes
in interest rates.
International Financial Reporting
Standards (IFRS)
A globally accepted high-quality accounting
standard already used by public companies
in over 100 countries around the world.
Interval Funds
A type of mutual fund that has the
fl exibility to buy back its outstanding shares
periodically. Also known as closed-end
discretionary funds.
In-the-Money
A call option is in-the-money if its strike
price is below the current market price of
the underlying security. A put option is
in-the-money if its strike price is above the
current market price of the underlying
security. The in-the-money amount is the
option’s intrinsic value.
Intrinsic Value
That portion of a warrant or call option’s
price that represents the amount by which
the market price of a security exceeds the
price at which the warrant or call option
may be exercised (exercise price). Considered
the theoretical value of a security (i.e., what
a security should be worth or priced at in
the market)
Inventory
The goods and supplies that a company
keeps in stock. A statement of fi nancial
position item.
Inventory Turnover Ratio
Cost of sales divided by inventory. The
ratio may also be expressed as the number
of days required to sell current inventory by
dividing the ratio into 365.
Investment
The use of money to make more money, to
gain income or increase capital or both.
Investment Advisor (IA)
An individual licensed to transact in the full
range of securities. IAs must be registered in
by the securities commission of the province
in which he or she works. The term refers
to employees of SRO member fi rms only.
Also known as a Registrant or Registered
Representative (RR)
Investment Company, or Fund
A company which uses its capital to invest
in other companies. There are two principal
types: closed-end and open-end or mutual
fund. Shares in closed-end investment
companies are readily transferable in the
open market and are bought and sold like
other shares. Capitalization is fi xed.
Open-end funds sell their own new shares
to investors, buy back their old shares, and
are not listed. Open-end funds are so-called
because their capitalization is not fi xed;
they normally issue more shares or units as
people want them.
Investment Counsellor
A professional engaged to give investment
advice on securities for a fee
Investment Dealer
A person or company that engages in the
business of trading in securities in the
capacity of an agent or principal and is a
member of IIROC
Investment Industry Association of
Canada (IIAC)
A member-based professional association
that represents the interests of market
participants
Investment Industry Regulatory
Organization of Canada (IIROC)
The Canadian investment industry’s
national self-regulatory organization.
IIROC carries out its regulatory
responsibilities through setting and
enforcing rules regarding the profi ciency,
business and fi nancial conduct of dealer
fi rms and their registered employees and
through setting and enforcing market
integrity rules regarding trading activity on
Canadian equity marketplaces.
Investment Policy Statement
The agreement between a portfolio
manager and a client that provides the
guidelines for the manager…….
Investments in Associates
The ownership a company has in another company. As a general rule, signifi cant infl uence is presumed to exist when a company owns 20% or more of the voting rights of the other company
Investor
One whose principal concern is the
minimization of risk, in contrast to the
speculator, who is prepared to accept
calculated risk in the hope of making
better-than-average profi ts, or the gambler,
who is prepared to take even greater risks
Irrevocable Benefi ciary
A benefi ciary whose entitlements under the
segregated fund contract cannot be
terminated or changed without his or her
consent.
Issue
Any of a company’s securities; the act of
distributing such securities.
Issued Shares
That part of authorized shares that have
been sold by the corporation and held by
the shareholders of the company.
Investment policy statement
A statement developed for a fund’s
investment program by the investment
committee that outlines the investment
aspects of the fund.
