J, K, L

Question 1

Junior Bond Issue

Answer 1

A corporate bond issue, the collateral for
which has been pledged as security for other
more senior debt issues and is therefore
subject to these prior claims.

Question 2

Junior Debt

Answer 2

One or more junior bond issues.

Question 3

Keynesian Economics

Answer 3

Economic policy developed by British 
economist John Maynard Keynes who 
proposed that active government 
intervention in the market was the only 
method of ensuring economic growth and 
prosperity. See also Monetarism.

Question 4

Know Your Client Rule (KYC)

Answer 4

The cardinal rule in making investment
recommendations. All relevant information
about a client must be known in order to
ensure that the registrant’s recommendations
are suitable.

Question 5

Labour Force

Answer 5

The sum of the population aged 15 years
and over who are either employed or
unemployed.

Question 6

Labour Sponsored Venture Capital

Corporations (LSVCC)

Answer 6

LSVCCs are investment funds, sponsored
by labour organizations, that have a specifi c
mandate to invest in small to medium-sized
businesses. To encourage this mandate,
governments offer generous tax credits to
investors in LSVCCs.

Question 7

Lagging Indicators

Answer 7

A selection of statistical data, that on
average, indicate highs and lows in the
business cycle behind the economy as a
whole. These relate to business expenditures
for new plant and equipment, consumers’
instalment credit, short-term business
loans, the overall value of manufacturing
and trade inventories.

Question 8

Large Value Transfer System

LVTS

Answer 8

A Canadian Payments Association
electronic system for the transfer of large
value payments between participating
fi nancial institution.

Question 9

Leading Indicators

Answer 9

A selection of statistical data that, on average,
indicate highs and lows in the business cycle
ahead of the economy as a whole. These
relate to employment, capital investment,
business starts and failures, profi ts, stock
prices, inventory adjustment, housing starts
and certain commodity prices.

Question 10

LEAPS

Answer 10

Long Term Equity Anticipation Securities

are long-term (2-3 year) option contracts.

Question 11

Leverage

Answer 11

The effect of fi xed charges (i.e., debt
interest or preferred dividends, or both) on
per-share earnings of common stock.
Increases or decreases in income before
fi xed charges result in magnifi ed percentage
increases or decreases in earnings per
common share. Leverage also refers to
seeking magnifi ed percentage returns on an
investment by using borrowed funds,
margin accounts or securities which
require payment of only a fraction of the
underlying security’s value (such as rights,
warrants or options).

Question 12

Liabilities

Answer 12

Debts or obligations of a company, usually
divided into current liabilities—those due
and payable within one year—and
long-term liabilities—those payable after
one year. A statement of fi nancial position
category

Question 13

Liability Traders

Answer 13

Have the responsibility to manage a dealer’s
trading capital to encourage market fl ows
and facilitate the client orders that go into
the market, while aiming to lose as little of
that capital as possible. Liability traders can
be considered those who set the direction
for agency traders. Whereas agency traders
have formal client responsibilities, liability
traders have lighter responsibilities or none
at all.

Question 14

Life Cycle

Answer 14

A model used in fi nancial planning that
tries to link age with investing. The
underlying theory is that an individual’s
asset mix will change, as they grow older.
However the life cycle is not a substitute for
the “know your client rule”.

Question 15

Limit Order

Answer 15

A client’s order to buy or sell securities at a
specifi c price or better. The order will only
be executed if the market reaches or betters
that price

Question 16

Limited Liability

Answer 16

The word limited at the end of a Canadian
company’s name implies that liability of the
company’s shareholders is limited to the
money they paid to buy the shares. By
contrast, ownership by a sole proprietor or
partnership carries unlimited personal legal
responsibility for debts incurred by the
business.

Question 17

Limited Partnership

Answer 17

A type of partnership whereby a limited
partner cannot participate in the daily
business activity and liability is limited to
the partner’s investment.

Question 18

Liquidity

Answer 18

1. The ability of the market in a particular
   security to absorb a reasonable amount of
   buying or selling at reasonable price
   changes. 2. A corporation’s current assets
   relative to its current liabilities; its cash
   position.

Question 19

Liquidity Preference Theory

Answer 19

A theory that tries to explain the shape of
the yield curve. It postulates that investors
want to invest for the short-term because
they are risk averse. Borrowers, however,
want long-term money. In order to entice
investors to invest long-term, borrowers
must offer higher rates for longer-term
money. This being the case, the yield curve
should slope upwards refl ecting the higher
rates for longer borrowing periods.

Question 20

Liquidity Ratios

Answer 20

Financial ratios that are used to judge the
company’s ability to meet its short-term
commitments. See Current Ratio.

Question 21

Liquidity Risk

Answer 21

The risk that an investor will not be able to
buy or sell a security quickly enough
because buying or selling opportunities are
limited

Question 22

Listed Stock

Answer 22

The stock of a company which is traded on

a stock exchange

Question 23

Listing Agreement

Answer 23

A stock exchange document published when
a company’s shares are accepted for listing.
It provides basic information on the
company, its business, management, assets,
capitalization and fi nancial status.

Question 24

Load

Answer 24

The portion of the offering price of shares 
of most open-end investment companies 
(mutual funds) which covers sales 
commissions and all other costs of 
distribution.

Question 25

London InterBank Offered Rate

LIBOR

Answer 25

The rate of interest charged by large
international banks dealing in Eurodollars
to other large international banks.

Question 26

Long Position

Answer 26

Signifi es ownership of securities. “I am long
100 BCE common” means that the speaker
owns 100 common shares of BCE Inc.

Question 27

Long-Term Bond

Answer 27

A bond with greater than 10 years

remaining to maturity.