Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
65 Cards in this Set
- Front
- Back
Treasury Bills
|
- Sold by Bank of Canada
- bi-weekly auction - sell at discount - 3,6,12 month maturities |
|
T-Bills Taxation
|
Interest Income
|
|
T-Bill & Commerical Paper Taxation if sold prior to Maturity
|
Interest = purchase price x Eff rate x (#days held/365)
Cap Gain = proceeds of disposition - int - ACB |
|
Commercial Paper
|
Short-term debt issued by a corporation.
Higher return then TBill |
|
Bankers Acceptance
|
Promissory note issued by corporation and guaranteed by the bank.
Lower risk/return then commercial paper |
|
Redeemable GIC's
|
Subject to market value adjustment.
If interest rates are higher then the GIC instituiton will pay a lower amount for redemption |
|
Index-Linked GIC
|
Returns are based on the performance of markets (a %)
Upside and downsides are capped |
|
Index-Linked GIC
Taxation |
Taxed as interest income, but only reported upon maturity
|
|
Mortgage-Backed Securities (MBS)
|
Pool of mortgages
created through NHA 5 years is common term. |
|
4 Categories of MBS
|
1. Exclusive homeowner
2. multi-family 3. social housing 4. Any combo oof above |
|
MBS Taxation
|
Interest & Capital
|
|
Bonds relationship with interest rates.
|
Increasing Interest rates = Decreasing bond prices
Decreasing Interest rate = Increasing bond prices |
|
Taxation on Bonds
|
Interest taxable
Capital Gains from selling/buying on secondary market. |
|
Government Bonds
Marketable |
Non-redeemable
|
|
Government Bonds
Real Return Bonds |
Interest rate adjusted according to CPI
|
|
Government Bonds
Canada Savings Bonds |
Non-marketable - redeemable
after 3 months seller receives face value + int owing up to end of prior month |
|
Government Bonds
Types of Canada Savings bonds |
R-Series - Interest paid annually
C-Series - Interest compounded annually ** Only c for registered investments |
|
Government Bonds
Premium Bonds |
Only redeemable on maturity date and the 30 days that follow
|
|
Government Bonds
Provincial & Municipal bonds |
Lease liquid then federal bonds
|
|
Corporate Bondholders
|
Take priority over common/preferred shareholders
|
|
Extendible Bond
|
Can extend the maturity date at a specified date.
Done if current rates are lower then that of the bond |
|
Retractable Bond
|
Allows for an early redemption
Done if current interest rates are higher then the bond |
|
Convertable Bond
|
Can be exchanged for common shares.
Conversion Price = Par Value/#of shares |
|
Callable Bond
|
Issuer has the right to call the bond at a specific date and price.
Usually bond holder will get paid a premium |
|
Floating Rate Bond
|
Interest rates are market sensitive
|
|
Income Bond
|
Interest paid to bondholder based on the corporations prifitability
|
|
Mortgage Bond
|
Can be issued as first or second mortgage bond, with the second mortgage bonds have a higher rate
|
|
Strip Bond
|
Coupon (interest pymts) are stripped.
Sold at premium Tax: must include notional amount on tax return. |
|
Junk Bond
|
Issued by corporations with poor credit rating.
|
|
Record Date
|
Date the individual must own shares to be eligable for dividends
|
|
Declaration Date
|
date corporation announces the next date and amount of dividends oayments
|
|
Ex-Dividend Date
|
Any shares bought after this date are ineligible for dividends
|
|
Cum Dividend
|
With Dividend
Shares bought prior to ex-date |
|
Liquidating Dividend
|
Paid when corpoaration is going out of business
Taxation: dividend & return of capital |
|
IPO
|
Intial Public Offering
Going public |
|
Margin
|
Portion of purchase price that must be deposited to an investors account when borrowing to buy shares
|
|
Short-Selling
|
Borrowing shares and selling at a high price, then re-buying at lower price and returning to lender.
|
|
Preferred Shares
Difference from Common Shares |
1. Do not have Voting rights
2. Dividends - paid first 3.Dissolution - paid first |
|
Convertable Preferred Shares
|
Can be converted to common shares
|
|
Retractable Preferred Shares
|
Corp has to buy back shares on a set date for set amount
|
|
Purchase Fund / Sinking Fund
|
Corporations right to retire shares on a specific date or over a period of years
|
|
Call Option
|
The "option" to buy a security at a specified price.
|
|
Put Option
|
The "option" to sell a security at a specified price
|
|
Writers
|
Those who sell call/put options
|
|
Intrinsic Value
|
Amount by which a security is "in-the-money"
|
|
Straddle
|
Investor owns a call and put option on the same security due to volitile market
|
|
Warrant
|
Issued by corporation and allows the investor to buy a set # of shares on a set date
|
|
Rights
|
Allows shareholder the right to purchase newly issued shares to maintain porportional ownership
|
|
Forward Contract
|
2 parties agree to exchange an item in the future at a pre-determined price
ie:event tickets - buy now or at the door |
|
Futures
|
agreement to sell a product in the future at a specific price.
Face value= forward price X quantity Forward price=set in agreement Spot Price = current price |
|
Clone Funds
|
Where used to get around foriegn content limits
|
|
Swap
|
Exchange of one security for another.
Used when investors have comparitve advantage in opposite markets |
|
Closed-End Mutual Fund
|
Traded on secondary market
|
|
Unit Investment Trusts (UIT)
|
Often invested in bonds etc.
Have a maturity date Used by onvestory looking for income in the long-term |
|
Net Asset Value Per Share (NAVPS)
|
(Market Value of fund Assets - Liabilities)/# of outstanding shares
|
|
Segregated Fund
|
Owned by a trust with the policyholder is deemed benefciary
|
|
Seg Fund - Death of annuitant
|
Policy matures and proceeds paid to beneficiaary. Owner must report Capital gains
|
|
Seg Fund - Death of Owner
|
Contract Continues and can pass to a spouse as spousal rollover.
|
|
Labour Sponsered Funds (LSIF's)
|
Federal Credit = 15% of initial Investment.
Max $5000 |
|
After Tax Cost of LSIF
Non-Registered |
After tax Cost =
Cost x (100%-fed. credit + prov. credit) |
|
After Tax Cost of LSIF
Registered |
Cost X (100% - (fed. credit + prov. credit)-MTR)
|
|
Income Trust
|
Income flows through the trust and is taxed at the hands of the investor
|
|
Flow-Through Shares
|
Canadian Companies in Resource Explortion.
Tax advantages allowed to the corporation can flow through to the investor |
|
Taxation of Foreign holdings
|
Interest income of Dividends are fully taxable.
Capital gains are treated the same Can claim forign tax credit |
|
Real Estate Investment Trusts(REIT)
|
Trade in secondary market
pay quartely distributions taxed as mutual funds |