R

Question 1

Rally

Answer 1

A brisk rise in the general price level of the

market or in an individual stock.

Question 2

Random Walk Theory

Answer 2

The theory that stock price movements are
random and bear no relationship to past
movements.

Question 3

Rate of Return

Answer 3

See Yield.

Question 4

Rational Expectations

Answer 4

School of economic theory which argues
that investors are rational thinkers and can
make intelligent economic decisions after
evaluating all available information.

Question 5

Real Estate Investment Trust

REIT

Answer 5

An investment trust that specializes in real
estate related investments including
mortgages, construction loans, land and real
estate securities in varying combinations. A
REIT invests in and manages a diversifi ed
portfolio of real estate.

Question 6

Real GDP

Answer 6

Gross Domestic Product adjusted for
changes in the price level. Also referred to
as constant dollar GDP.

Question 7

Real Interest Rate

Answer 7

The nominal rate of interest minus the
percentage change in the Consumer Price
Index (i.e., the rate of inflation)

Question 8

Record Date

Answer 8

The date on which a shareholder must
officially own shares in a company to be
entitled to a declared dividend. Also
referred to as the date of record.

Question 9

Red Herring Prospectus

Answer 9

A preliminary prospectus so called because
certain information is printed in red ink
around the border of the front page. It does
not contain all the information found in
the fi nal prospectus. Its purpose: to
ascertain the extent of public interest in an
issue while it is being reviewed by a
securities commission.

Question 10

Redemption

Answer 10

The purchase of securities by the issuer at a
time and price stipulated in the terms of the
securities. See also Call Feature.

Question 11

Redemption Price

Answer 11

The price at which debt securities or
preferred shares may be redeemed, at the
option of the issuing company

Question 12

Redeposit

Answer 12

An open-market cash management policy
pursued by the Bank of Canada. A
redeposit refers to the transfer of funds
from the Bank to the direct clearers (an
injection of balances) that will increase
available funds. See also Drawdown.

Question 13

Registered Education Savings Plans

RESPs

Answer 13

Registered Education Savings Plans

RESPs

Question 14

Registered Pension Plan (RPP)

Answer 14

A trust registered with Canada Revenue 
Agency and established by an employer to 
provide pension benefits for employees 
when they retire. Both employer and 
employee may contribute to the plan and 
contributions are tax-deductible. See also 
Defined Contribution Plan and Defined 
Benefit Plan.

Question 15

Registered Retirement Income

Fund (RRIF)

Answer 15

A tax deferral vehicle available to RRSP
holders. The planholder invests the funds in
the RRIF and must withdraw a certain
amount each year. Income tax would be
due on the funds when withdrawn.

Question 16

Registered Retirement Savings

Plan (RRSP)

Answer 16

An investment vehicle available to
individuals to defer tax on a specified
amount of money to be used for retirement.
The holder invests money in one or more
of a variety of investment vehicles which are
held in trust under the plan. Income tax on
contributions and earnings within the plan
is deferred until the money is withdrawn at
retirement. RRSPs can be transferred into
Registered Retirement Income Funds
upon retirement.

Question 17

Registered Security

Answer 17

A security recorded on the books of a
company in the name of the owner. It can
be transferred only when the certifi cate is
endorsed by the registered owner. Registered
debt securities may be registered as to
principal only or fully registered. In the
latter case, interest is paid by cheque rather
than by coupons attached to the certifi cate.
See also Bearer Security

Question 18

Registrar

Answer 18

Usually a trust company appointed by a
company to monitor the issuing of
common or preferred shares. When a
transaction occurs, the registrar receives
both the old cancelled certifi cate and the
new certifi cate from the transfer agent and
records and signs the new certifi cate. The
registrar is, in effect, an auditor checking on
the accuracy of the work of the transfer
agent, although in most cases the registrar
and transfer agent are the same trust
company

Question 19

Regular Delivery

Answer 19

The date a securities trade settles – i.e., the
date the seller must deliver the securities.
See also Settlement Date.

Question 20

Regular Dividends

Answer 20

A term that indicates the amount a

company usually pays on an annual basis.

Question 21

Reinvestment Risk

Answer 21

The risk that interest rates will fall causing
the cash flows on an investment, assuming
that the cash flows are reinvested, to earn
less than the original investment. For
example, yield to maturity assumes that all
interest payments received can be reinvested
at the yield to maturity rate. This is not
necessarily true. If interest rates in the
market fall the interest would be reinvested
at a lower rate. Reinvestment risk recognizes
this risk.

Question 22

Relative Value Hedge Funds

Answer 22

A type of hedge fund that attempts to profit
by exploiting irregularities or discrepancies
in the pricing of related stocks, bonds or
derivatives.

Question 23

Reporting Issuer

Answer 23

Usually, a corporation that has issued or has
outstanding securities that are held by the
public and is subject to continuous
disclosure requirements of securities
administrators.

Question 24

Reset

Answer 24

A contract provision which allows the
segregated fund contract holder to lock in
the current market value of the fund and set
a new maturity date 10 years after the reset
date. Depending on the contract, the reset
dates may be chosen by the contract holder
or be triggered automatically

Question 25

Resistance Level

Answer 25

The opposite of a support level. A price
level at which the security begins to fall as
the number of sellers exceeds the number of
buyers of the security.

Question 26

Restricted Shares

Answer 26

Shares that participate in a company’s
earnings and assets (in liquidation), as
common shares do, but generally have
restrictions on voting rights or else no
voting rights

Question 27

Retail Investor

Answer 27

Individual investors who buy and sell
securities for their own personal accounts,
and not for another company or
organization. They generally buy in smaller
quantities than larger institutional
investors

Question 28

Retained Earnings

Answer 28

The cumulative total of annual earnings
retained by a company after payment of all
expenses and dividends. The earnings
retained each year are reinvested in the
business.

Question 29

Retractable

Answer 29

A feature which can be included in a new
debt or preferred issue, granting the holder
the option under specified conditions to
redeem the security on a stated date – prior
to maturity in the case of a bond.

Question 30

Return on Equity

Answer 30

A profitability ratio expressed as a
percentage representing the amount earned
on a company’s common shares. Return on
equity tells the investor how effectively their
money is being put to use.

Question 31

Reversal Patterns

Answer 31

Formations that usually precede a sizeable

advance or decline in stock prices.

Question 32

Reverse Split

Answer 32

A process of retiring old shares with fewer
shares. For example, an investor owns 1,000
shares of ABC Inc. pre split. A 10 for 1
reverse split or consolidation reduces the
number held to 100. Results in a higher
share price and fewer shares outstanding

Question 33

Revocable Benefi ciary

Answer 33

A benefi ciary whose entitlements under the
segregated fund contract can be terminated
or changed without his or her consent

Question 34

Right

Answer 34

A short-term privilege granted to a
company’s common shareholders to
purchase additional common shares, usually
at a discount, from the company itself, at a
stated price and within a specifi ed time
period. Rights of listed companies trade on
stock exchanges from the ex-rights date
until their expiry

Question 35

Right of Action for Damages

Answer 35

Most securities legislation provides that
those who sign a prospectus may be liable
for damages if the prospectus contains a
misrepresentation. This right extends to
experts e.g., lawyers, auditors, geologists,
etc., who report or give opinions within the
text of the document.

Question 36

Right of Redemption

Answer 36

A mutual fund’s shareholders have a
continuing right to withdraw their
investment in the fund simply by
submitting their shares to the fund itself
and receiving in return the dollar amount
of their net asset value. This characteristic
is the hallmark of mutual funds. Payment
for the securities that have been redeemed
must be made by the fund within three
business days from the determination of the
net asset value.

Question 37

Right of Rescission

Answer 37

The right of a purchaser of a new issue to
rescind the purchase contract within the
applicable time limits if the prospectus
contained an untrue statement or omitted a
material fact.

Question 38

Right of Withdrawal

Answer 38

The right of a purchaser of a new issue to
withdraw from the purchase agreement
within two business days after receiving the
prospectus

Question 39

Risk Analysis Ratios

Answer 39

Financial ratios that show how well the

company can deal with its debt obligations.

Question 40

Risk-Averse

Answer 40

Descriptive term used for an investor
unable or unwilling to accept the
probability or chance of losing capital. See
also Risk-Tolerant

Question 41

Risk-Free Rate

Answer 41

The rate of return an investor would receive
if he or she invested in a risk free
investment, such as a treasury bill.

Question 42

Risk Premium

Answer 42

A rate that has to be paid in addition to the
risk free rate (T-bill rate) to compensate
investors for choosing securities that have
more risk than T-Bills.

Question 43

Risk-Tolerant

Answer 43

Descriptive term used for an investor
willing and able to accept the probability of
losing capital. See also Risk-Averse.