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Question 1

Macroeconomics

Answer 1

Macroeconomics focuses on the performance
of the economy as a whole. It looks at the
broader picture and to the challenges facing
society as a result of the limited amounts of
natural resources, human effort and skills,
and technology.

Question 2

Major Trend

Answer 2

Underlying price trend prevailing in a

market despite temporary declines or rallies.

Question 3

Managed Account

Answer 3

An account whereby a licensed portfolio
manager has the discretion to decide and
execute suitable investment decisions on
behalf of clients

Question 4

Managed Product

Answer 4

A pool of capital gathered to buy securities
according to a specifi c investment mandate.
The pool seeds a fund managed by an
investment professional that is paid a
management fee to carry out the mandate

Question 5

Management Expense Ratio

Answer 5

The total expense of operating a mutual
fund expressed as a percentage of the fund’s
net asset value. It includes the management
fee as well as other expenses charged directly
to the fund such as administrative, audit,
legal fees etc., but excludes brokerage fees.
Published rates of return are calculated after
the management expense ratio has been
deducted.

Question 6

Management Fee

Answer 6

The fee that the manager of a mutual fund
or a segregated fund charges the fund for
managing the portfolio and operating the
fund. The fee is usually set as fi xed
percentage of the fund’s net asset value.

Question 7

Managers’ Discussion and Analysis

MD&A

Answer 7

A document that requires management of
an issuer to discuss the dynamics of its
business and to analyze its fi nancial
statements with the focus being on
information about the issuer’s fi nancial
condition and operations with emphasis on
liquidity and capital resources.

Question 8

Margin

Answer 8

The amount of money paid by a client
when he or she uses credit to buy a security.
It is the difference between the market
value of a security and the amount loaned
by an investment dealer.

Question 9

Margin Agreement

Answer 9

A contract that must be completed and
signed by a client and approved by the fi rm
in order to open a margin account. This
sets out the terms and conditions of the
account

Question 10

Margin Call

Answer 10

When an investor purchases an account on
margin in the expectation that the share
value will rise, or shorts a security on the
expectation that share price will decline,
and share prices go against the investor, the
brokerage fi rm will send out a margin call
requiring that the investor add additional
funds or marketable securities to the
account to protect the broker’s loan.

Question 11

Marginal Tax Rate

Answer 11

The tax rate that would have to be paid on
any additional dollars of taxable income
earned

Question 12

Market

Answer 12

Any arrangement whereby products and
services are bought and sold, either directly
or through intermediaries.

Question 13

Market Capitalization

Answer 13

The dollar value of a company based on the
market price of its issued and outstanding
common shares. It is calculated by
multiplying the number of outstanding
shares by the current market price of a
share.

Question 14

Market Maker

Answer 14

A trader employed by a securities fi rm who
is authorized and required, by applicable
self-regulatory organizations (SROs), to
maintain reasonable liquidity in securities
markets by making fi rm bids or offers for
one or more designated securities

Question 15

Market Order

Answer 15

An order placed to buy or sell a security

immediately at the best current price.

Question 16

Market Risk

Answer 16

The non-controllable or systematic risk

associated with equities.

Question 17

Market Segmentation Theory

Answer 17

A theory on the structure of the yield
curve. It is believed that large institutions
shape the yield curve. The banks prefer to
borrow short term while the insurance
industry, with a longer horizon, prefers
long-term money. The supply and demand
of the large institutions shapes the curve

Question 18

Marketability

Answer 18

A measure of the ability to buy and sell a
security. A security has good marketability
if there is an active secondary market in
which it can be easily bought and sold at a
fair price

Question 19

Marketable Bonds

Answer 19

Bonds for which there is a ready market
(i.e., clients will buy them because the
prices and features are attractive).

Question 20

Marking-to-Market

Answer 20

The process in the futures market in which
the daily price changes are paid by the
parties incurring losses to the parties
earning profi ts.

Question 21

Married Put or a Put Hedge

Answer 21

The purchase of an underlying asset and the
purchase of a put option on that underlying
asset.

Question 22

Material Change

Answer 22

A change in the affairs of a company that is
expected to have a signifi cant effect on the
market value of its securities.

Question 23

Mature Industry

Answer 23

An industry that experiences slower, more
stable growth rates in profi t and revenue
than growth or emerging industries, for
example.

Question 24

Maturity

Answer 24

The date on which a loan or a bond or

debenture comes due and is to be paid off.

Question 25

Maturity Date

Answer 25

The date at which the contract expires, and
the time at which any maturity guarantees
are based. Segregated fund contracts
normally mature in 10 years, although
companies are allowed to set longer periods.
Maturities of less than 10 years are
permitted only for funds such as protected
mutual funds, which are regulated as
securities and are not segregated funds.

Question 26

Maturity Guarantee

Answer 26

The minimum dollar value of the contract
after the guarantee period, usually 10 years.
This amount is also known as the annuity
benefi t

Question 27

Medium-Term Bond

Answer 27

A bond with 5 to 10 years remaining to

maturity

Question 28

Microeconomics

Answer 28

Analyzes the market behaviour of individual
consumers and fi rms, how prices are
determined, and how prices determine the
production, distribution, and use of goods
and services.

Question 29

Monetarists

Answer 29

School of economic theory which states
that the level of prices as well as economic
output is determined by an economy’s
money supply. This school of thought
believes that control of the money supply is
more vital to economic prosperity than the
level of government spending, for example.
See also Keynesian Policy.

Question 30

Monetary Aggregates

Answer 30

An aggregate that measures the quantity of
money held by a country’s households,
fi rms and governments. It includes various
forms of money or payment instruments
grouped according to their degree of
liquidity, such as M1, M2 or M3.

Question 31

Monetary Polic

Answer 31

Economic policy designed to improve the
performance of the economy by regulating
money supply and credit. The Bank of
Canada achieves this through its infl uence
over short-term interest rates.

Question 32

Money Market

Answer 32

That part of the capital market in which
short-term fi nancial obligations are bought
and sold. These include treasury bills and
other federal government securities, and
commercial paper, and bankers’
acceptances and other instruments with
one year or less left to maturity. Longer
term securities, when their term shortens to
the limits mentioned, are also traded in the
money market

Question 33

Money Purchase Plan (MPP)

Answer 33

A type of Registered Pension Plan; also
called a Defi ned Contribution Plan. In
this type of plan, the annual payout is based
on the contributions to the plan and the
amounts those contributions have earned
over the years preceding retirement. In
other words, the benefi ts are not known but
the contributions are.

Question 34

Mortgage

Answer 34

A contract specifying that certain property

is pledged as security for a loan.

Question 35

Mortgage-Backed Securities

Answer 35

Bonds that claim ownership to a portion of
the cash fl ows from a group or pool of
mortgages. They are also known as
mortgage pass-through securities. A
servicing intermediary collects the monthly
payments from the issuers and, after
deducting a fee, passes them through (i.e.,
remits them) to the holders of the security.
The MBS provides liquidity in an otherwise
illiquid market. Every month, holders
receive a proportional share of the interest
and principal payments associated with
those mortgages.

Question 36

Mortgage Bond

Answer 36

A bond issue secured by a mortgage on the

issuer’s property

Question 37

Moving Average

Answer 37

The average of security or commodity 
prices calculated by adding the closing 
prices for the underlying security over a 
pre-determined period and dividing the 
total by the time period selected.

Question 38

Moving average convergence- Divergence (MACD)

Answer 38

A technical analysis tool that takes the
difference between two moving averages
and then generates a smoothed moving
average on the difference (the divergence)
between the two moving averages.

Question 39

Multi-Disciplinary Accounts

Answer 39

Fee-based accounts that are an evolution of 
separately managed accounts. With 
multi-disciplinary accounts, separate 
models are combined into one overall 
portfolio model in a single account.

Question 40

Multi-Manager Accounts

Answer 40

A type of fee-based account that offers
clients and their advisors more choice in
terms of product and services. Often,
clients are aligned with two or more
portfolio models and each portfolio model
is a component of the client’s greater
diversifi ed holdings.

Question 41

Multiple

Answer 41

A colloquial term for the Price/Earnings

ratio of a company’s common shares

Question 42

Mutual Fund

Answer 42

An investment fund operated by a company
that uses the proceeds from shares and units
sold to investors to invest in stocks, bonds,
derivatives and other fi nancial securities.
Mutual funds offer investors the advantages
of diversifi cation and professional
management and are sold on a load or no
load basis. Mutual fund shares/units are
redeemable on demand at the fund’s current
net asset value per share (NAVPS).

Question 43

Mutual Fund Dealers Association

MFDA

Answer 43

The Self-Regulatory Organization (SRO)
that regulates the distribution (dealer) side
of the mutual fund industry in Canada

Question 44

Mutual Fund Wraps

Answer 44

Are established with a selection of
individual funds managed within a client’s
account. Mutual fund wraps differ from
funds of funds. The client holds the actual
funds within their account, as opposed to a
fund that simply invests in other funds. In
most cases, a separate account is established
for the client and the selected funds are
held inside that dedicated account