privately owned computerized networks that match orders for securities outside recog exchange facilities; also "Proprietary Electronic Trading Systems" (PETS) or "Non-SRO-Operated Trading Systems" (NETS)

firms who have access to the trading facilities of a stock exchange

clients' bids + offers for stock channeled to single
central market + compete against each other; i.e. stock exchange; market in which securities bought + sold by brokers acting as agents for client; opposite of dealer market where trades conducted OTC

trades all financial + equity futures + options; non-agricultural options + futures incl all ops previously traded on TSX + futures contacts previously traded on Toronto Futures Ex

details estimate of revenues + expenses which results in projection of budget surplus/deficit

alternative equities market to TSX Venture Exchange for emerging companies; est 2003

offers Internet web-based system
for dealers to reported completed trades in unlisted and unquoted
equity securities in Ontario

offers institutional investors electronic access to federal bond bid + offer, prices + yields frm its 6 bank-owned dealers (80% of trans in bond market)

joint venutre of several IDA member firms + ops as electronic trading system for fixed-income securities providing investors w/ real-time bid + offer prices + hourly trade data; Govt of Canada bonds, treasury bills, prov bonds + some corp bonds

wealth; real, material things (land, buildings) and
representational items (money, stocks, bonds)

positive difference between purchase price and selling
price of an investment

electronic trading system for fixed-income securities; operates 2 marketplaces, retail (accessible by registered dealers on behalf of retail clients) + institutional (accessible by registered dealers, institutional investors, govts + pension funds)

gives shareholders right to vote @ comp annual meeting; securities representing ownership in comp; entitled to receipt of dividends if declared

network of dealers who trade with each other, usually
over telephone/computer; i.e. bond market; securities bought and sold over-the-counter; dealers act as principals for clients; unlisted market

that which is owed; means of using future purchasing power in the present before a summation has been earned; money borrowed frm lender + borrower usually pays interest + must repay @ set date

products based on / derived from underlying instrument (ex. stock index, financial asset, commodity, interest rate, currency)

investment made by the owners or stockholders of a business; net worth in a business

orgs, such as pension/mutual fund comp, that
trade large volumes of securities + typically have a steady flow of $ to invest

intermediaries between buyers and sellers,
acting on clients' behalf in securities market

total value of a company's stock; market's
valuation of a company at a given time, calculated by multiplying # of
outstanding shares by current stock price

hold inventory of securities which they've agreed to
"make a market", sell from inventory to buyers and add to inventory when acquire securities frm sellers; post individual bid and ask quotations (OTC market)

fund raises capital by selling shares/units to
investors, invests that capital, then unitholders receive part of $ made from investment

grants holder the right, but not obligation, to buy/sell a
certain quantity of underlying instrument at set price for set period of time

Approved Participants; firms who have access to the trading facilities of a stock exchange

amt of after-tax income available for
purchase of goods and services

owners entitled to fixed dividend that must be paid
out of earnings before any dividend payed to common shareowners; don't
usually have a vote on direction of management unless comp doesn't pay
dividends

market where security sold when first issued + sold
to investors

recognized stock markets that operate like exchanges and provide facilities for users to post quotations + report trades

individual investors who buy + sell securities for
their own personal accounts (not for another comp/org)

where subsequent trading takes place; where
individual investors trade among themselves

marketplace where buyers + sellers of securities meet
to trade w/ each other; prices established according to laws of supply + demand

lists senior equities, some debt
instruments convertible into listed equity, income trusts, ETFs

trades junior securities, a few debenture issues

trades agricultural futures + options

role of investment dealer; broker acts for/on behalf of
buyer/seller but doesn't itself own title to securities

where Canadian securities cleared

normally issue shares only @ start-up/other
infrequent periods + reinvest proceeds + borrowings in protfolio of securities to produce income + cap gain

process where insurance comps (owned by
policyholders) reorganize into comps owed by shareholders (policyholders become shareholders)

dealer may, under exceptional circumstances,
terminate financing agreement before completion

continually issue shares to investors + redeem shares
on demand @ their net asset/"break-up" value/share of fund's investment portfolio

original sale of comp's securities; new security issue

role of investment dealer; securities firm owns securities as part of own inventory @ some stage in buying/selling trans w/ investors

type of mutual fund sold by insurance brokers which
is guaranteed to return all/part of initial investment (may be protected frm creditors under certain circumstances)

Investment Dealers Assn of
Canada; Mutual Funds Dealers Assn; Market Regulation Services Inc.;
Bourse de Montreal; TSX; TSX Venture; organizations that play
regulatory role in securities industry by setting rules governing many
aspects of their members' operations, like sales + finance

investment bank buys the securities from the company
and immediately resells the securities to investors for a slightly higher price, making money on the spread

method of dispute resolution where independent arbitrator can listen to facts + arguments of parties to a dispute, decide how dispute should be resolved, and decide what remedy should be imposed

responsible for administering reg framework for Quebec's financial sector (notably insurance, deposit insurance insts, distribution of financial products, financial services, + securities); intended to simplify procedures for consumers + industry members; verifies competence + integrity of industry participants through education requirements, certification + registration process; resource for consumers to obtain financial info; facility for lodging complaints

insures eligible deposits up to 100,000 per depositor in each member inst (banks, trust + loan comps) + reimburses depositors if member inst fails

not-for-profit corp est by the CDN investment industry in 69 to protect investor assets in event ofmember's bankruptcy; funded by CIPF members (approx 200 investment dealers in Can); investors auto receive coverage by opening acct w/ member and coverage ltd to $1,000,000 for any combo of cash/securities held; when member becomes bankrupt, CIPF moves the investor's acct (w/in limits of coverage, to another investment dealer where investor can access it)

forum to co-ordinate + harmonize regulation of CDN cap markets; want to give Can a securities reg system that protects investors frm unfair, improper/fraudulent practices

must be sent to security holders of target comp w/in 15 days of date of bid - board of directors of comp need to provide info + include that they will accept or reject bid + reasons why (if not done have to issue statement that they can't do this and why)

obligation as a person who essentially holds the character of a trustee

director/senior officer of comp/a subsidiary; person/comp (excluding underwriters in course of pub distrib) beneficially owning, directly/indirectly or controlling/directing +10% of voting shares of comp; director/senior officer of comp which is itself insider of comp due to ownership, control or direction over +10% of voting shares of comp involved; reporting issuer where has purchased, redeemed or otherwise acquired any of its securities, for so long as holds any of its securities

proficiency requirements similar to IAs, but training period = 30 days and it's a 30-month requirement

any change in comp that would have signif effect on market price/value

attempt to create reg environment consistent + applicable across country

web-based system used by investment dealers + employees to file registration forms electronically when applying for approval by one/more of stock exchanges, CSA, or IDA

first step in complying w/ reg is completion of this prior to acceptance of any order

bank, investment dealer, or CDN Depository for Securities that has possession of securities but is not beneficial owner

responsible for regulating + supervising banks, insurance, trust, loan + investment comps, + co-op credit assts that are chartered, licensed/registered by fed govt; supervises +1200 fed regulated pension plans; doesn't regulate securities industry; provides actuarial advice to fed govt; conducts review of certain provincially chartered financial insts by virtue of fed-prov arrangements through agency agreements w/ CDIC

other outlet for investors who feel have been treated unfairly; indy org that investigates customer complaints against financial services providers (incl banks + other deposit=taking orgs, investment dealers and mutual fund dealers/comps); provides prompt + impartial resolution of complaints that customers have not been able to resolve w/ financial services provider

power of attorney given by shareholder that gives designated person authority to vote shareholder's stock

issuer, directors of issuer, seller of security, underwriter who signs certificate for prospectus + any other person who signs prospectus may be liable for damages if contains misrepresentation

industry orgs that have privilege of regulating their own members; responsible for enforcement of their members' conformity w/ securities legislation + have power to prescribe own rules of conduct + financial requirements for members

offer to shareholders to purchase shares of comp that, w/ offeror's already owned securities, will in total exceed 20% of outstanding voting/equity securities

common set of trading rules consistently in all markets in Can

detailed statem of country's economic transfers w/ rest of world for given period of time (quarter or year); 2 components = current + cap account

fluctuations in output + employment

cap transfers and acquisitions/disposal of non-produced, non-financial assets (like fixed assets or inventories); shows the redistribution of cap assets btwn sectors of economy and rest of world

change @ approx same time + same direction as whole economy, providing info abt current state of it

StatsCan's combo of 10 leading indicators into a single index of leading indicators

one of most widely used indicators of inflation; considered measure of cost of living in Can

when cost of production output rises (higher costs push inflation higher)

tied directly to fluctuations in biz cycle; rises when economy weakens + firms lay off workers, drops when economy strong again

sustained fall in prices where annual change in CPI is negative year after year; opposite of inflation

when higher and continued consumer demand pushes inflation higher

unemployed who drop out of labour force bcs job prospects too poor; available + willing to work but can't find jobs + haven't made specific effort to find job w/in previous month; not included as part of labour force

decline in rate @ which prices rise; decrease in rate of inflation (prices still rising, but at slower rate)

statistics/data series that are used to analyze biz conditions + current economic activity

resources that consumers, firms, + govts use to produce goods + services

finished product, purchased by ultimate end user

country's central bank maintains domestic currency @ fixed level against another currency / composite of other currencies

central bank allows market forces to determine value of currency

esult of normal labour turnover (people entering + leaving work force; ongoing creation + destruction of jobs)

level below which unemployment will not drop w/o causing neg effects; @ this level, economy thought to be operating @ close to full potential/capacity

market value of all final goods + services produced w/in a country in given time period (usually a year/a quarter)

total market value of all G&S produced by only Can nationals, whether G&S produced in Can or other country

sum of working-age pop who are employed/unemployed

change after economy changes; can confirm that biz cycle pattern occurring

tend to peak + trough before overall economy (designed to anticipate emerging trends in economic activity)

arrangement that allows buyers + sellers to conduct business w/ each other

focuses on performance of economy as a whole; looks @ broader picture + to challenges facing society as result of limited amts of natural resources, human effort + skills, + tech; while microeconomics looks @ how individual is impacted by changes in prices + income levels, macroeconomics focuses on unemployment, inflation, recessions, govt spending + taxation, poverty + inequality, budget deficits + national debts

analyzes market behaviour of individual consumers + firms, how prices determine production, distrib, and use of goods + services; ex. consumer decides how much of good to purchase, workers decide what jobs to take, firm decides how many workers to hire + how much output to produce

level below which unemployment will not drop w/o causing neg effects; @ this level, economy thought to be operating @ close to full potential/capacity

dollar value of all G&S produced in given year @ prices that prevailed in same year

rate where effects of inflation haven't been removed

level below which unemployment will not drop w/o causing neg effects; @ this level, economy thought to be operating @ close to full potential/capacity

ndicator used to measure inflation pressures in economy by looking @ difference btwn real GDP and potential GDP

represents share of working-age pop that's in labour force; shoes willingness of people to enter work force + take jobs

trade-off btwn unemployment + inflation such that lower level of unemployment is associated w/ higher level of inflation

what economy capable of producing when existing inputs of labour, cap, + tech fully employed @ normal levels of use; max level of real GDP that economy can maintain w/o inflation increasing

constant dollar GDP; dollar value of all G&S produced in a year valued @ price that prevailed in some base year; inflation adjusted

nominal interest rate minus expected inflation rate over term of loan

used to gauge cost of disinflation; describes extent to which GDP must be reduced w/ increased unemployment to achieve 1% decrease in inflation rate

biz cycle phase when economic growth slows sharply but doesn't turn negative, while inflation falls / remains low

workers unable to find work / fill available jobs bcs lack necessary skills, don't live where job available / decide not to work @ wage offered; closely tied to changes in tech, int competition + govt policy

ratio of export prices to import prices

represents share of labour force unemployed/looking for work

min rate @ which Bank will lend $ on short-term basis to chartered banks + other members of Canadian Payments Assn (CPA) in role as lender of last resort

if total spending for year higher than revenue collected

if revenue collected during year exceeds spending

not-for profit assn est 1980 by CDN Payments Act, to "establish and operate national systems for the clearing and settlement of payments and other arrangements for the making or exchange of payments" w/in Can; reg body for settlement + claering of payments; Minister of Finance responsible for overseeing ops

trans of deposits to Bank frm chartered banks, draining supply of available cash balances frm banking system; causes contraction in availability of loans to consumers + bizs, which places upward pressure on interest rates

use of govt's spending + taxation powers to pursue economic goals like full employment + sustained long-term growth

advocates use of direct govt. intervention as means of achieving economic growth + stability

allows participating financial insts to conduct large transactions w/ each other through electronic wire system

economy inherently stable and (left to own self-adjusting mechanism) will auto move to stable path of growth

sets out to improve performance of economy by regulating growth in money supply + credit

accumulation of total govt. borrowing over time; sum of past deficits - sum of past surpluses

firms + workers are rational thinkers + can evaluate all consequences of govt. policy decision (neutralizing intended impact of policy)

trans of funds frm Bank to chartered banks; adding $ to system places downward pressure on interest

used to offset undesired downward pressure on overnight financing costs; Bank offers to sell govt securities to chartered banks w/ agreement to repurchase them next day @ predetermined price

used to relieve undesired upward pressure on overnight financing rates; Bank offers to buy govt securities frm primary dealer (like chartered bank) w/ agreement to sell them back the next day @ predetermined price

to foster environment of prosperity, market should be left on its own + govt. intervention should be held to min

provides that, in add to property owned @ time of issue, all other property that comp may acquire during life of bond issue will auto come under mort to provide add security to bondholders

secured by physical assets in trust deed written into bond contract

can be purchased only btwn Oct + April of each year, but can be cashed by owner @ any bank in Can @ any time; not transferable (have no secondary market) so don't rise + fall in price and may always be cashed @ full par value + accrued interest

allow issuer to call bond @ price based on great of par or price based on yield of equivalent-term govt. of Can bond + yield spread (add amt of yield)

mortgage principal amt fixed + can't be inc during life of loan

bond that is secured by financial asset (like stock/other bonds) that is deposited + held by trustee for holders of bond

price @ which convertible securities (bond/preferred stock) can be converted into common stock @ set conversion ratio 

combine certain advantages of bond w/ option of ex bond for common shares

may be secured by something other than physical asset (ex general claim on residual assets / issuer's credit rating)

credit rating agency based in Toronto;  est. 1976, one of largest credit rating agencies in Can

time period in which decision to exercise maturity op on extendible + retractable bond must be made

pledge equip as security instead of real property

issued + sold outside domestic market + typically denom in currency other than that of domestic market

usually issued w/ short maturity term (usually 5 years) but w/ option for investor to ex debt for identical amt of longer-term debt (usually 10 years) @ same / slightly higher rate of interest by extension date

maturity date of bond can be extended so that bond changes from short-term to long-term

amt bond issuer contracts to pay @ maturity (maturity value); bond trading @ 100

first charge on comp's assets, earnings + undertakings before unsecured current liabilities are paid

innovation built into certain convertible debt issues to give issuing comp more scope in calling in debt for redemption

offer fixed rates of interest for specific term (longer than w/ term deposit); both principal + interest payments guaranteed; can be redeemable/non-redeemable

municipal security; part of bond matures in each year during term of bond

date @ which bond matures + principal paid back

credit rating agency based in Toronto

legal document containing agreement to pledge land, buildings / equip as security for load + entitling lender to take over ownership of these properties if borrower fails to pay interest / repay principal when due

permits mortgagor to borrow add money up to original amt of loan after loan has been reduced, w/o rewriting mort

amt bond issuer contracts to pay @ maturity (maturity value); bond trading @ 100

time it takes convertible to recoup premium through higher yield, compared w/ dividend that is paid on stock

original amt on which interest calc

fund set up to retire specified amt of outstanding bonds/debentures through purchases in market (if  can be made at/below stipulated price)

issued by govt of Can; nominal return on bonds linked to Consumer Price Index (CPI); semi-annual interest payments + final redemption value calculated by incl inflation compensation component

bond w/ redemption feature

issued w/ long maturity term (usually at least 10 years) but give investors right to turn in bond for redmption @ par several years sooner (usually 5) by retraction date

municipal security; part of bond matures in each year during term of bond

sums of $ that are set aside out of earning each year to provide for repayment of all/part of debt issue by maturity

provide indy rating services for many debt securities; AAA-D

created when dealer acquires block of high-quality bonds + separates individual future-dated interest coupons (bond residue) fm rest of bond

junior to other securities issued by comp / other debts assumed by comp; exact status of issue described in prospectus

short-term govt obligations; offered in denominations frm $1000-$1 million; don't pay interest but are sold at a discount + mature @ 100

written document that grants trustee title to piece of property for benefit of another

cash available to enterprise for day-to-day ops; loans for biz expenses

approx measure of annual return on bond if held to maturity

created when dealer acquires block of high-quality bonds + separates individual future-dated interest coupons (bond residue) fm rest of bond

amt of interest built up during previous holding period; paid @ time of purchase frm buyer to previous holder; for G of C bonds, par amt x coupon rate x time period (days of accrued interest for transaction, not including first day / 365)

bonds where an actual certificate is produced with detachable coupons and principal payment (on each coupon payment date investors "clip" coupon + submit to bank/financial inst for payment from issuer, same w/ residual principal @ maturity)

national provider of trade clearing and settlement services

when a security is sold to an investor, it doesn't have to be delivered until the end of the settlement period

interest rate commensurate with perceived risk

measure of the sensitivity of a bond's price to changes in interest rates; approx % change in price/value of bond for 1% change in interest rates

shape of yield curve is reflection of market consensus expectations for future interest rates (ex. upward sloping curve = interest rates expected to rise in future)

investors must be compensated for assuming risk of holding longer-term debt securities + this compensation = yield / liquidity premium

investors concentrate debt holdings in particular term to maturity (ex. inst investor may focus holdings on bonds w/ terms 2-5 years, while other investor has preference for long-term bonds)

real rate + inflation rate (rate of return before inflation taken into acct)

like bearer bonds but certificate has name of owner printer on it and can only be sold/transferred when owner signs back of certificate

risk that coupons can't be reinvested @ same interest rate that prevailed @ time bond purchased

graph depicting term structure of interest rates (rates vary depending on term to maturity of various debt instruments)

% rate of return paid on fixed income security if investor buys and holds it to maturity date; calc based on coupon rate, length of time to maturity, + market price; assumes coupon interest paid over life of bond will be reinvested at same rate

if comp's Board of Directors votes not to pay 1+ preferred dividends when due, unpaid dividends accumulate/pile up; must be paid before common dividends pair / before preferred shares redeemed

offer dividend rate determined by auction btwn holder + issuer; rate may be based on # of orders to hold, sell / buy + typically offer reset min + max dividend rate

issuers reserve right to call/redeem preferred issues @ stated time + price; provide for payment of small premium above amt of per share asset entitlement fixed by charter, as compensation to investor whose shares being called in

offers computer-based systems to replace certificates as evidence of ownership in securities transactions

introduced Mar 99, trademark Merrill Lynch; long-term junior subordinated debt instruments issued by CND corps; hybrid securities, offer features that resemble long-term corp bonds + preferred shares - quarterly distrib treated as regular interest income for tax purposes and trade cum dividend (ex-date declared) in that accrued interest not added to market price; comp has right to defer payments of interest up to 20 consecutive quarterly periods, not compounding

arises frm sale (/deemed sale) of cap property for more than cost; must be reported + 50% of gains must be incl in income for that year + taxed @ investor's marginal tax rate

enable holder to convert preferred into some other class of shares (usually common) @ predetermined price(s) + for stated period of time

traded before ex-dividend date (dividend goes to buyer, not seller)

don't pay out regular dividend but shares mature @ preset future date + return based on purchase price + redemption value paid out @ maturity

fixed-reset/fixed floaters; shares entitle holder to fixed dividend for predetermined period of time after which dividend becomes variable

all shareholders recorded as of this date will be entitled to the dividend

comp diverts shareholders' dividends to purchase of add shares of comp; portion of a company's profit paid to common and preferred shareholders; may be cash, property or stock

to alleviate double taxation, corps pay tax but shareholders gross-up amt of dividend by 45% to compensate (so in the end not taxed)

includes 30 large, blue-chip stocks that trade on NYSE; computed each day by adding up current prices of 30 stocks in index + dividing by specific divisor developed by Dow Jones & Co.

traded on/after ex-dividend date (dividend goes to seller, not buyer)

on + after this date, stock sells ex-dividend (the seller retains the dividend and the buyer is not entitled to it); set @ 2nd biz day before dividend record date

pay dividends in amts that fluctuate to reflect changes in interest rates (interest rates rise, dividend payments rise, vice versa)

preferreds w/ dividends + certain other features payable in/related to foreign funds

can't be called/redeemed as long as issuing comp in existence

type of order usually entered @ specified price to buy/sell security + held open until executed/cancelled

have certain rights to a share in earnings fo comp over + above specified dividend rate

whatever $ not paid out to shareholders in form of dividends; remains in comp

shareholders given right to participate to unlimited degree in earnings of comp + assets on liquidation, but don't have full voting rights; 3 categories,  non-voting, subordinate voting, restricted voting

shareholder can force comp to buy back preferred on specified date(s) + @ specified price(s)

retractables where redemption value may be paid in cash/in common shares (gen @ election of issuer)

measures changes in total market cap of stocks in Index (stock's weight w/in Index changes if price/# of shares outstanding changes)

structured preferreds/equity dividend shares; based on underlying portfolio of common shares

used to bring high-priced stock into popular price range, say $10-20; more shares, less value per share

proof of ownership of stock; registered in name of securities firm rather than owner of shares; readily transferable to new owner

pay dividends in amts that fluctuate to reflect changes in interest rates (interest rates rise, dividend payments rise, vice versa)

right to vote @ annual meeting + special/general meetings; elect directors who guide + control biz ops of corp; approval for sale, merger or liquidation of biz or amendment of charter

trader must execute total # of shares specified on order before client will accept a fill

opposite of all or none order; client will accept all stock in odd, broken or board lots up to full amt of order

clients expected to make full payment for purchases / full delivery for sales on/before settlement date

order to buy/sell that expires if not executed on day entered (all orders considered this unless otherwise specified)

order to buy/sell that is good for specified # of days + then auto cancelled if not filled by end of trading session on date specified in order

open order; order to buy/sell that remains n effect until is either executed/cancelled; many firms won't allow these + will insist on end date (after which order may be renewed)

order to buy/sell securities @ specific price/better (order only to be executed if market reaches/betters that price)

amt of funds investor must personally provide (margin + amt provided by member firm together make up total amt required to complete trans)

for clients who wish to buy/sell securities on credit + initially pay only part of full price of trans (member firm lends remainder of trans price to client, charging interest on loan)

document that must be signed by brokerage client who wishes to trade on margin

demand for client to deposit money or eligible securities w/ broker to bring margin acct up to initial margin/min maintenance requirements

order to buy/sell specified # of securities @ best available market price; all orders not bearing specific price

order for account in which partner, director, officer, shareholder, IA ro other employee of member holds direct/indirect interest or arbitrage order; where order of client competes with non-client order @ same price, client's order given priority of execution over non-client order; labeled Pro, N-C, or Emp (employee)

T-bills, same day as trans; most debt securities maturing up to 3 years, 2 biz days after; all other securities, 3 biz days after

created when investor sells security he/she doesn't own

sale of securities that seller doesn't own (tries to buy them back later @ lower price, making a profit)

order to buy security only after it has reached certain price; may be used to protect short position or ensure that stock is purchased while price rising (opposite of stop loss order)

order to sell security when price of 1 board lot declines to/falls below certain amt (limiting loss/protecting paper profit); become market orders when stop price reached (no assurance that will be filled, could decline further)

options that can be exercised @ any time up to + including expiration date

what party holding short position is when party holding long position exercises the option

option that gives owner right to buy underlying asset

ole clearing corp for all ex-traded options + futures in Can

writing a put + setting aside amt of cash equal to strike price (if possible, should be invested in short-term liquid money market security to earn interest)

contracts that have physical asset (gold, crude oil, soybeans) as underlying asset

writers own underlying stock + will use position to meet obligations if assigned

btwn day of announcement that rights issued + ex rights date; anyone who buys stock entitled to receive rights if hold stock until @ least record date; rights can't be separated frm common stock

risk that one of parties to derivative contract can't meet its obligation to other party

financial contract whose value is derived frm/dependent on value of some other asset (the derivative's underlying asset); can act as substitute for/offset to position in underlying asset; used to manage risk of existing/anticipated position in underlying asset + speculate on value of underlying asset; 2 types, options + forwards

security that tracks an index + represents basket of stocks like an index mutual fund, but trades like a stock on an exchange

for owner of call options, involves buying underlying asset frm assigned writer @ price = strike price, owner of put options, involves selling

both parties must fulfill obligations/exercise rights under contract on/before this date, after, contract is auto terminated

anyone buying shares on/after ex-rights date not entitled to receive rights frm comp; rights can be separated frm common stock

contracts that have a financial asset (stock, bond, currency, interest rate, index) as underlying asset

contracts btwn buyer + seller but unlike options, both parties obligate themselves to trade underlying asset in future @ price agreed on today

gives party on other side of trans higher level of assurance that terms of forward will be honoured

attempt to eliminate/reduce risk of holding asset for future sale/anticipating future purchase of asset; involves taking position in derivative w/ payoff opposite to that of asset to be hedged

call option - when price of underlying asset higher than strike price (holder can buy asset @ strike price then sell @ higher market price); put option - price of underlying asset lower than strike price (holder can sell asset @ strike price then cover short position @ lower market price)

in-the-money portion of call/put option; of rights during ex-rights period = (market price of stock - exercise/subscription price of rights) / # of rights needed to buy 1 share, during cum-rights period = (market price - exercise/subscription price) / (# of rights needed + 1); amt by which market price of underlying common stock exceeds exercise price of warrant

long-term option contracts (expiration date far in future)

daily settlement of gains and losses on futures market

don't own underlying stock (if assigned, underlying stock must first be pruchased in market before sold to call option buyer)

fee paid from buyer to seller to obtain right buy/sell underlying asset

liquidating position before expiration by cancelling it (offsetting long pos = selling same type + # of contracts, opposite for short pos)

total # of contracts in series that are currently outstanding + haven't been closed out/exercised

when an investor est new position in option contract

contracts btwn 2 parties, buyer + seller; buyer has right to buy/sell specified quantity of underlying asset in future @ price agreed on today + seller has obligation to complete trans

fee paid from buyer to seller to obtain right buy/sell underlying asset

call option - price of underlying asset lower than strike price, put option - price of underlying asset higher than strike price

gives party on other side of trans higher level of assurance that terms of forward will be honoured

price paid by holder to writer to obtain right to buy/sell; current price x 100 shares x # of contracts

to determine list of shareholders who will receive rights (like w/ dividends)

privilege granted to shareholder to acquire add shares directly frm issuing comp; short expiration date

exercise price of a right; usually lower than market price of shares @ time right issued

OTC forward agreement involving series of cash flows exchanged btwn 2 parties on specified future dates

usually warrants - help make debt/preferred share issues more attractive to buyers by giving them op to participate in appreciation of issuer's common shares

amt that option trading above intrinsic value; option price - intrinsic value; value of uncertainty - greater the uncertainty about where option will be @ expiration, greater option's time value (further away frm expiration date, greater value)

describes size/amt of the underlying asset represented by 1 option contract

underlying interest; underlying security; what derivative dependent on; can be financial asset (stock/bond), currency, interest rate, equity index, real asset/commodity (crude oil, gold, wheat)

security that gives holder right to buy shares in comp frm issuer @ set price for set period of time; different frm call option in that issued by comp itself, not by other investors

dealer required to support offer price of stock once it begins trading in sec market; issuing comp + dealer negotiate terms as part of underwriting contract; 3 types

long form prospectus offering - dealer expected to sell issue by didn't guarantee it

max # of common/preferred shares that corp may issue under term of its charter

form of financing used in import/export transactions

buys bonds from Financing Group + includes Financing group dealers; group of investment dealers, each of which individually assumes financial responsibility for part of underwriting of new issue of securities for a corp

long form prospectus offering - dealer expected to sell issue by didn't guarantee it

once approval of final prospectus granted (issue may be distrib to investing public)

investment dealer negotiates w/ issuer directly + bids for specific new issue of securities; dealer assumes risk of position (acts as principal); details of price + type of issue decided simultaneously w/ filing short form prospectus/shortly after; spread btwn dealer's cost + final selling price may be as low as 1c of issue price (well below trad financing spreads); sold by investment dealer once final reg approval received, either as private or public (under short form prospectus); distrib not as wide

developed by TSX Venture; vehicle to provide bizs w/ op to obtain financing earlier in development than might be possible w/ regular IPO; 2-stage process, first involves filing + clearing of CPC prospectus (completion of IPO + listing of CPC's common shares on Venture Ex), second involves id of biz/asset that can be acquired as Qualifying Trans (QT), prep + filing w/ Venture Ex of comprehensive CPC info circular containing prospectus-level disclosure of QT, holding of shareholder's meeting to get approval to close QT; issuer must raise btwn $200,000 + $1,900,000 in IPO (price can range frm 15c - 30c a share)

$ invested in biz by owners, stockholders /others who share in profits (different from debt capital)

debt instruments issued by comps to meet short-term financing needs

Can govt brings new issues of fixed-coupon marketable bonds + t-ills to market on regularly scheduled basis through this; securities issued by way of auction, whereby amt won @ auction based on bids submitted; bids submitted by 12:30 PM on date of auction, may consist of up to 7 bids stated in multiples of $1000 + subject to min size per individual bid of $100,000; bids state yield each bidder hopes to earn, not price for bond; all parties have bidding limits

sets out the obligations of reporting issuers (other than investment funds) for financial statems, management's discussion + analysis (MD&A), annual information forms (AIFs), biz acquisition reports (BARs), material change reporting, info circulars, proxies and proxy solicitation, restricted share disclosure, + certain other cont disclosure-related matters

distinct legal entity separate frm people who own its shares; pays taxes + can sue/be sued in court of law; property acquired doesn't belong to shareholders of corp but to corp itself; shareholders have no liability for debts of corp + there's no add levy on shareholders if debts of bankrupt corp exceed value of realizable assets; able to raise funds by issuing equity/debt (more suitable for large biz ventures)

safeguards placed in issue's contract w/ purchaser to quard against any further weakening in position of security holder if issuer's financial position weakens

shortly before opening of trading, ex can order trading in a security to be delayed if there is heavy influx of buy/sell orders for that security (delay gives ex traders time to sort out orders + match up buys w/ sells to allow fair + orderly trading when order removed); doesn't affect trading in other listed securities

permanent cancellation of listing privileges; reasons could incl delisted security no longer exists, having been called for redemption or substituted for other seucirty as result of merger, comp w/o assets or bankrupt, pub distrib of security dwindled to unacceptably low level, comp failed to comply w/ terms of listing agreement

one that is issued in prov govt's name

individual elected by corp shareholders to serve on that corporation's Board of Directors

study of corp + industry w/in which corp ops, incl position of corp w/in industry, financial record + structure of corp, future prospects + risk factors associated w/ industry + comp

Equity Capital

$ invested in biz by owners, stockholders /others who share in profits (different from debt capital)

serve as payment for properties, goods/services; shares held by indy trustee in trust for its owner that can't be sold/transferred unless special approval given (shares can be released only w/ permission of appropriate authorities, like stock ex(s) or securities admins); ties value of shares held to what happens to property used to obtain shares; prevents owners frm selling shares before proper market can develop; maintain full voting + dividend privileges; release usually determined by formula designed not to disrupt market for comp's free shares, usually based on milestones being reached by comp

not a full prospectus

prelim prospectus must be approved by securities commission + receipt given; must contain sufficient details on securities being offered for sale, so as to provide full, true + plain disclosure of all material facts abt securities proposed to be distrib; must contain all info that may have been omitted in prelim (offering price, proceeds to issuer, underwriting discount, other required info); must incl consent of experts (appraisers, engineers, auditors, lawyers) whose reports/opinions referred to in prospectus, certificates + undertakings relating to financing + distrib arrangements + other documents evidencing compliance w/ regulatory requirements

process by which issuer (govt/comp) raises debt/equity cap either publicly or privately

partners involved in day-to-day ops; personally liable for debts + obligations incurred

Schedule I + Schedule II banks, investment dealers, foreign dealers active in distrib of govt securities

op granted to underwriter in pub offering giving the op, for period of 15 to 45 days (usually 30 days) after effective date, to purchase add securities from issuer (usually up to 15% of shares being sold) @ initial price

info circular dealers may prepare for in-house use only; for sales reps, highlights salient features of new issue (pro + con) in order to successfully solicit interest to gen public

market that develops for security prior to actual ex listing; unofficial OTC market comprised of dealers wishing to execute customer's orders as well as support issue until official listing of stock on recog ex

obligation issued in name of crown corp but guaranteed by prov govt as to payment

can be ordered/arranged @ any time to allow signif new to be reported + widely disseminated

must accompany notice of shareholders' meeting + be sent to all shareholders; mjust contain details about proposed directors, directors' + officers' remuneration, interest of directors + officers in material transactions, appointment of auditors + particulards of other matters to be acted upon @ meeting

first time comp offers stock to investing public

that part of authorized shares that have been issued by corp

can't participate in daily biz activity + liability limited to partner's investment

details specific regs + reporting requirements that comp must follow to keep listing in good standing

total dollar value of comp based on current market price of issued + outstanding shares

allows dealer to cancel issue if market conditions changed to pt where issue unsaleable

any info that signif affects (or would reasonably be expected to have signif effect on) market price of securities being offered

firms' management negotiates w/ dealer on type of security, price, interst/valuation multiple, special features + protective provisions needed to market new issue successfully

how Bank of Can distributes bonds to primary distributors; service provided by CDN Depository for Securities

new + separate board of TSX Venture Ex that provides trading forum for comps taht have fallen below Venture Ex's listing standards; provides trading forum for issuers that have been listed on TSX Venture but no longer meet Tier Maintenance Requirements (are Inactive Issuers), CPCs that have failed to complete QT in accordance w/ requirements of ex, TSX issuers that no longer meet cont listing requirements + would have been eligible for listing on TSX Venture as Inactive Issuers under existing policies

bid accepted in full by Bank of Can + bonds awarded @ auction average; bid ceiling = $3 million; allotted by Bank of Can @ average price of accepted competitive tenders; in multiples of $1000 w/ min of $1000

appointed by directors; corp employees responsible for day-to-day ops of biz ;hold office until annual meeting following appointment / until removed by directors; chairman of the board, pres, executive vice-pres, vice-pres(s)

part of issued shares which remain outstanding + owned by shareholders of comp

op granted to underwriter in pub offering giving the op, for period of 15 to 45 days (usually 30 days) after effective date, to purchase add securities from issuer (usually up to 15% of shares being sold) @ initial price

add payment over + aboce original entitlement on entire issue in apyment for services as financial advisors + syndicate managers/leads

stated face value of share, most commonly expressed in terms of so many dollars/share; no fixed relationship btwn it + current market value

involves 2+ persons contributing to biz, whether be cap/expertise required to run enterprise; legislated under Partnership Act (2 forms of agreements, general + limited)

submitted to prov securities commissions for review when issuer + underwriters have agreed to basic terms + methods of issuing the new securities; required to display in red ink on front cover statement that is prelim; disclosure document required under prov securities laws + underwriters use it to solicit expressions of interest frm potential buyers of security; price + size of issue usually not stated bcs info not finalized until after issue has been marketed to investment community

govt securities distributors that maintain certain threshold of activity

new issue of securities by issuer; gen takes place in IPO market; investment dealer uber important

/placement; one/few large inst investors (banks, mutual fund comps, insurance comps, pension funds) solicited + entire issue sold to 1+ of them; since offered to sophisticated investors, usually no formal prospectus need be prepared (reduces cost of distrib); usually announced after have occurred

provides detailed description of securities offered + of issuing corp (incl history, ops, management, risk + audited financial statems); basic principle governing = "full, true + plain disclosure of all material facts relating to securities offered"; more imp items = details of offering, what comp plans to do w/ proceeds frm issue, info on biz + affairs of issuer, factors affecting investment decision, info on promoters + principal security holders + interest of management in material transactions, financial info incl comp's share + loan cap structure + op results + debt etc.

safeguards placed in issue's contract w/ purchaser to quard against any further weakening in position of security holder if issuer's financial position weakens

power of attorney given by shareholder that gives designated person authority to vote shareholder's stock @ shareholder's meeting

part of issued shares that are outstanding + available for trading by public + not held by comp officers, directors or insts that hold controlling interest in comp; exculdes those shares owned in large blocks by insts; smaller the float, more volatile the price of stock will be

submitted to prov securities commissions for review when issuer + underwriters have agreed to basic terms + methods of issuing the new securities; required to display in red ink on front cover statement that is prelim; disclosure document required under prov securities laws + underwriters use it to solicit expressions of interest frm potential buyers of security; price + size of issue usually not stated bcs info not finalized until after issue has been marketed to investment community

has made pub distribs + is subject to cont disclosure requirements of annual financial + other required info

public sale of comp's previously issued securities made after IPO; usually handled by investment dealer/syndicate (dealer purchases shares frm comp @ agreed price + resells them @ higher price to insts + public, making profit on spread); inc # shares out

other dealers, normally members of the IDA, who aren't members of Banking Group; invited in writing by the Financing Group to buy bonds at discount + offer for more to clients (excluding exempt list); each member has liability for orders placed w/ Financing Group

may be used only by certain senior reporting issuers; works on theory that much of info that would be incl in full prospectus is already available + widely known bcs of cont disclosure; shortens time period + streamlines procedures by which qualified issuers can access CND securities markets through prospectus offerings; issuer allowed to use if it files electronically using SEDAR, is a reporting issuer in at least 1 CND jurisdiction, is up to date in filings in every CND jurisdiction in which is reporting issuer, has filed current annual financial statems + current AIF in at least 1 CND jurisdiction in which is reporting issuer, is not issuer whose ops have ceased or whose principal asset is cash, cash equivalents or ex listing, has equity securities listed + posted for trading/quoted on "short form eligible ex"; focuses on matters relating prim to securities being distrib (price, distrib spread, use of proceeds, securitie's attributes); inc by reference certain info contained in most recent AIF + cont disclosure documents of issuer + describes how members of public may obtain copies of these documents

when dealer syndicate initially sells securities in excess of original amt offered by issuer for sale to public (oversells the offering)

involves 1 person running own biz + is taxed on earnings @ personal income tax rate; individual profits if venture successful + liable for all debts losses + obligations; not regulated to extent of other forms of biz org + proprietor free to make decisions, but resources limited for getting cap + expertise

imposed if comp's financial condition doesn't meet ex's requirements for cont trading, if comp tails to comply w/ terms of listing agreement, or for some other good cause; if comp solves problem to ex's satisf w/in time required by exchange, trading in suspended security will resume; during suspension members usually allowed to execute orders for suspended security in OTC market except for those securities suspended frm trading on TSX Venture

usually includes many major dealers, whose combined financial responsibility + distrib powers are more than adequate to underwrite + sell large issues required by prov govts

ex. stock exchange, everyone can see what's going on

appear in financial press as matter of record once deal completed; incl names of dealers in Financing Group

comp may find it advantageous to repurchase some of outstanding shares; don't have voting rights/dividend entitlements, but comp does have op of reselling them back to market @ later date through secondary/treasury offering

safeguards placed in issue's contract w/ purchaser to quard against any further weakening in position of security holder if issuer's financial position weakens