T Flashcards
Tactical asset allocation
The asset mix designed to take advantage of
perceived opportunities created by
short-term fluctuations in the relative
performance of asset classes. See also Asset
allocation, Asset class, and Strategic asset
allocation.
Tactical trading
Trading that carries out a portfolio’s tactical
asset allocation. Tactical trading involves
the shifting of positions or portfolio
allocations in reaction to or in anticipation
of the day-to-day release of economic
information. See also Strategic trading.
Tax Efficiency Ratio
The measure of how much of a pre-tax
return an investor keeps after paying tax
liabilities on realized or unrealized gains.
Tax Loss Harvesting
The act of voluntarily taking losses for the
purpose of creating a current tax deduction
to offset realized gains. The purpose is to
minimize tax liabilities and keep the asset in
the portfolio, where it can benefit the most
from compounding
Tax management
The use of investment accounts,
techniques, and strategies that aim to
reduce or limit the amount of tax paid by a
client. See also Marginal tax rate and Tax
situation.
Tax situation
The complete set of information required
to manage a client’s portfolio on a
tax-efficient basis, including, among other
things, the client’s margin tax rate, RRSP
contribution status, and investment
income. See also Marginal tax rate and
Tax management.
Technical analysis
The study of historical market action (price,
volume, and time) to determine probable
future price trends.
Technical analyst
An analyst who studies historical market action (price, volume, and time) to determine probable future price trends. See also Economist, Equity analyst, Investment strategist, and Quantitative analyst.
Technical anomaly
Is rooted in technical analysis. See
Technical analysis.
Temporal re-balancing
Re-balancing a portfolio at regular intervals,
such as a monthly, quarterly, semi-annually,
or annually. See also Re-balancing
Term structure
The relationship between interest rates and
time to maturity. The term structure is
normally represented in graphical form by
a yield curve. See also Yield curve.
Terminal value
An estimate for the intrinsic value of a stock
on the last forecast dividend or cash flow
date in a dividend discount or discounted
cash flow model.
Time diversification
A theory that says that, over the long term,
equities outperform all other asset classes,
and therefore the longer the time horizon,
the lower the risk of holding equities. A
belief in time diversification usually leads
to a recommendation that younger clients
hold a greater percentage of their portfolio
in equities than older clients would
Time horizon
The length of time expected to elapse
before one of a client’s significant goals
must be met.
Time value of money
The concept that money received today is
worth more than the same amount of
money to be received in the future, because
money received today can be invested to
earn interest up until that future date. The
time value of money concept is the primary
basis of debt securities valuation. See also
Present value and Future value.
Time-weighted return
A measure of a portfolio’s return that
eliminates the effect of investor contributions and withdrawals. See also
Dollar-weighted return.
Tolerance band
The percentage around which an asset class is allowed to vary from its strategic weight before it is rebalanced back. The tolerance band is also known as the Corridor.
Top-down analysis
An active approach to equity investing that
begins with a study of broad macro factors
before narrowing the analysis to individual
stocks, some of which are chosen for
investment. See also Active investment
approach and Bottom-up analysis.
Total asset turnover
A company’s total revenue divided by total
assets
Total return
A measure of the return on a security or
portfolio that includes both the change in
the value of the security or portfolio and
the income generated by the security or
portfolio.
Total return index
An index that measures the total return on
the securities that make up the index,
including price changes and the income
paid by the securities in the index. In most
cases, it is assumed that the income is
reinvested in the securities of the index.
Tracking Error
The error to which an index fund manager
tracks the returns of his target benchmark.
Traditional finance
The group of economic and investment
theories that form the theoretical
underpinnings for the investment-decision
making process. This includes an
assumption that investors are risk averse,
have rational expectations, and manage
their portfolios as a whole. See also Risk
aversion, Rational expectations, and
Behavioural finance.
Tranche
A division of a mortgage pool that has a
different claim on the cash flows of the
underlying pool than other tranches. These
tranches determine how cash flows from the
mortgages are redirected to commercial
mortgage-backed securities based on the
pool. See also Comm
Treasury bill
The shortest-term marketable debt security
issued by governments
Trend reversal
Action that signals a possible end and
reversal of the current trend. See also
Reversal formation.
Trend line
A line drawn on a chart that connects a
series of ascending lows (in the case of an
up trendline) or descending highs (in the
case of a down trendline). See also Up
trendline and Down trendline
Treynor Ratio
A measure of the average excess return per
unit of risk. Risk is measured by the
portfolio’s beta.
Triangle
A chart pattern that consists of a support and resistance line that meet–or are projected to meet–at a point called the apex. The slope of the support and resistance lines determines the type of triangle. Triangles can be reversal or continuation patterns. See also Ascending triangle, Descending triangle, and Symmetrical triangle.
