K, L, M, N, O, P Flashcards
“Know Your Client” (KYC) rule
An industry best practice that stipulates an
investment professional should give
appropriate cautionary advice to and
perform appropriate action for a client
based on the client’s investment objectives
and needs.
Laddered portfolio
In a laddered portfolio, bonds are initially
purchased with each maturity up to 30
years in equal proportions
Late trading
An illegal activity where a mutual fund
company allows a trader to enter an order,
either to purchase or sell, after the
established cut-off time.
Leverage
The use of borrowed money to extend the
buying power of a fund.
Limited partnership (LP)
A common form of business organization
with one or more general partners who
manage the business and assume legal debts
and obligations, and one or more limited
partners who are liable only to the extent of
their investment.
Liquidity date
Pre-specified times of the year when
investors may be allowed to redeem units in
an alternative investment fund.
Lockup
The time period that initial investments
cannot be redeemed from an alternative
investment fund or product.
Long–short investing
A portfolio construction technique designed to take greater advantage of information within the equity market. Purchases of stocks are offset dollar for dollar with short sales of other stocks
Macaulay duration
The weighted average maturity of a bond
where the weights are the relative
discounted cash flows in each period.
Macaulay duration formula
A formula devised by Frederick Macaulay
in 1938 to deal with the valuation and time
pattern of duration on bond:
Managed futures fund
A fund that invests in listed fi nancial and
commodity futures markets and currency
markets around the world
Management expense ratio (MER)
The amount charged to a fund by the fund
manager before any returns are paid out to
investors. The MER includes the fund
manager’s compensation and other expenses
associated with operating the fund.
Management styles
The term used to describe an equity
portfolio manager’s investment strategy;
generally falls into two categories: active or
passive.
Manufacturer (of a PPN)
An entity that helps the issuer of a PPN
design the notes and market them to
investors and distributors.
Market depth
The number of shares available at the bid
price and offer price.
Market price
The price that a security will fetch on open
bidding in the market. Depending on the
type of security, market prices can be
interpreted in different ways.
Market timing
Buying or selling global securities after
global markets have closed (but still remain
open in North America because of time
zone differences) to take advantage of
information that will affect the securities
when the markets reopen the next day.
Market–neutral investing
See Long–short investing
Means values
The actions taken in the present to achieve
a future goal.
Micro-cap stocks
Companies that tend to have a market
capitalization between $50 million and
$300 million.
Minimum investment exemption
Allows the sale of securities without a prospectus to investors who make a prescribed minimum investment; NI 45-106 sets this minimum at $150,000 across all jurisdictions in Canada.
Modern portfolio theory (MPT)
A theory developed by Harry Markowitz
that contends that diversification of a
portfolio across different asset classes with
low or negative correlation characteristics
will minimize risk.
Mortgage-backed securities
MBSs
Portfolios of mortgages assembled and sold
in tranches to increase mortgage capital for
lenders and offer secure higher-yielding
medium-term investments, comparable to
government bonds
National instruments
A series of regulations developed by the
CSA that are applicable across the country
and serve to harmonize rules and
regulations in each jurisdiction
