Absorption (Real Estate):

Measures the net change in occupied space from one period to the next.

Absorption Rate (Real Estate):

The absorption figure divided by the occupied space at the start of the period, and is expressed as a percentage.

Account Executive:

A Registered Representative, generally means any employee of a Stock Broker or Investment Dealer.

Accounts Payable:

The amount of money that a company owes to its creditors.

Accounts Receivable:

The amount of money that is owed to a company for goods or services that the company has sold on credit.

Accounting Designation:

The three major accounting designations in Canada are:-

Chartered Accountant (CA)

Certified Management Accountant (CMA)

Certified General Accountant (CGA).

Accretion (of a discount):

In portfolio accounting, a straight-line accumulation of capital gains on discount bonds in anticipation of par at maturity.

Accrual Basis:

This is a method of calculation that dictates the inclusion of earned interest or dividends whether they were received or not.

Accrued Interest:

Is the interest that has been earned but is not yet due because the interest payment date has not yet come.

Accrued Wages:

Accrued wages are what a company owes to its employees, and are listed on a company's balance sheet as outstanding.

Accumulation Plan:

An arrangement which enables an investor to purchase mutual funds shares regular in large or small amounts.

Active Investments Strategies:

A method of managing a portfolio that requires regular decisions and adjustment to the portfolio by the investor. Decisions involve how much to buy, what to buy, when to buy and sell and how to reinvest.

Actuary:

An actuary is a business professional with strong mathematical skills. Actuaries are generally involved in pricing insurance products and defined benefit pension plans.

Actuarial Present Value:

The actuarial present value is the value placed on future contingent payments and is the methodology forming the core of actuarial science.

Essentially, future payments are discounted with interest and the probability the payments will occur. Assumptions must be made by the actuary as to probabilities and discount factors.

Additional Rent (Real Estate):

Includes items for which the landlord invoices the tenant in addition to the net rent. This charge typically recovers the tenant's proportionate share of building costs such as realty taxes, operating costs, and electricity (if not metered separately). Business taxes are not included in Additional Rent and other items such as "Capital Tax" may or may not be added on top of Additional Rent charges.

Adjustable Rate Mortgage (ARM):

A mortgage in which the interest rate is adjusted periodically based on a preselected index. Also sometimes known as the re negotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.

Adjusted Cost Base:

The amount needed when calculating your capital gains or losses. The amount includes commissions and other currents tax considerations.

Adjustment Interval (Real Estate):

On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index.

Administrator:

An individual or trust company appointed by a proper court to administer the estate of a person who has died without leaving a valid will. If a woman is appointed, she is known as an administratrix.

Adverse Market Conditions:

Unfavorable time to Buy or Sell.

Affinity Credit Card:

A credit card that has a promotion arrangement with an affiliated organization (often a charity or non-profit group). The logo of the group appears on the card and the group usually gets a percentage of the sales made on the card.

Aggregate Demand:

Is the relationship between the total quantity of goods and services demanded and the price level.

Aggregate Supply:

Is the relationship between the total quantity of goods and services supplied and the price level.

Aggressive Investment:

A volatile, difficult-to-predict investment. This is type if investment can have rapid gains and loss, and normally suited for long-term holdings (10 or more years), as investors willing to accept the volatility in the value of their investments.

Allowance for Doubtful Loans:

The amount considered adequate to absorb anticipated credit related losses in a portfolio of loans.

Alternative Minimum Tax:

The required minimum tax calculation which ensures that high income earners will be required to pay.

American Depository Receipt (ADR):

Issued by a U.S. bank, an ADR represents one or more units of a foreign security and is generally issued to simplify the physical handling and legal technicalities governing foreign securities issues. Australian and South African mining shares traded in the U.S., for instance, are generally in the form of adr's.

Amortization Period (Real Estate):

The actual number of years it will take to repay a mortgage loan in full. This can be well in excess of the loan's term. For example, mortgages often have five-year terms but 25-year amortization periods.

Amortize:

Literally, to kill off, to make dead in business, it means to put money aside at intervals in order to provide in advance of maturity for the payment of a debt.

Analyst, Security Analyst:

They attempt with varying degrees of success, to evaluate the investment quality of securities that mean they must study the financial condition of companies with attention to capital structure, the amount of working capital available, prospective earning and dividends, etc. Some analysts specialize in certain industries or kinds of securities.

Annual Percentage Rate (APR):

An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account point and other credit cost. The APR allows home buyers to compare different types of mortgages based on the annual cost for each loan.

Annual Report:

Reports range from very simple to very elaborate - each year a printed report containing information about a company's financial conditions.

Annuitant:

An individual who purchases an annuity and will receive payments from that annuity.

Annuity:

A series of regular periodic payments comprising principal and interest. An annuity is a contract providing for a series of payments. In the case of retirement, an annuity is usually purchased from an insurance company who then pays the purchaser a monthly amount while still alive. Annuities may have more complicated features such as indexing, guarantee periods and benefits payable to a spouse or other beneficiary after death.

When an individual purchases an annuity, they usually pay a lump sum from their RRSP, or other source of funds, to an insurer. The insurer then takes this (premium) and divides by an annuity factor based on mortality, current interest rates and payment features.

Appraised Value (Real Estate):

An estimate of the value of the property offered as security for a mortgage loan. This appraisal is done for mortgage lending purposes and may not reflect the market value of the property.

Arbitrage:

An "arbitrageur " simultaneously buys and sells a commodity or security in different markets. The term arbitrage is used for a whole string of complicated trading maneuvers, exploiting the differences in spot prices, futures prices and interest rates.

Arm's Length:

Acting at arm's length contemplates a negotiation between parties with opposing interest, each of whom has only an economic interest in the outcome. Non-arm's length is one with a conflict of interest.

Arm's Length Transaction:

A transaction that is conducted as through the parties were unrelated, thus avoiding any conflict of interest.

Arrears:

Are dividend or interest payments, accrued since the last payment, which are still owed but that have not been paid yet.

Ask Price:

A proposal to sell a specific quantity of securities at a named price.

Assay, Assayer:

An assay is a test of a metal in which its purity is determined: an assayer has the function of conducting this analysis and usually confirms it by marking a precious mental accordingly.

Assessment (Real Estate):

A local tax levied against a property for a specific purpose, such as a sewer or street lights.

Asset:

Something that is owned - a physical asset, such as a car or a house, or a financial asset, such as cash or a Savings Account, Guaranteed Investment Certificate, Stocks, Bonds, etc.

Assets:

What you own or can call upon.

Asset Mix:

The allocation of your money among the different investment options. What you own or can call upon.

Asset-Backed Security (ABS):

Are bundled pools of assets that are sold as units and these units are a security that is backed by an asset. Mortgage pools were the principal forerunners of the ABS market and this is now a multi-billion-dollar market in the U.S.

More recently, banks in the U.S. and elsewhere have bundled credit card receivable and car loans as ABSs. The general theory is that safety in numbers provides a steady flow of income, usually interest income, while losses from defaults are spread across the pool.

Asset Class:

Asset class' typically refer to securities that have similar features. For example, bonds and stocks are the two main classes. They are then subdivided into more defined classes such as mortgages, common stock and preferred stock. Asset classes are used in the process of asset allocation to control the risk and return characteristics of a portfolio.

Asset Class Performance:

Are based on historical performance characteristics, which include the expected future return, the expected future volatility (risk) of the return, and how the returns of assets classes perform relative to each other.

Assumption (Real Estate):

The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost and new, probably higher, market-rate interest charges will apply.

Attribution Rule:

Any taxable income or gain realized on an asset will be attributed back to the person who made the investment, regardless of who holds title to the asset.

Automated Banking Machines (ABM's):

Terminals that allow customers to perform many everyday banking tasks, e.g.. deposits, withdrawals, bill payments and transfers between accounts.

Averages:

Several averages are used to measure the performance of the stock market or a certain type of stock. An average is the average price for a collection of stocks that are typical examples of the market they represent. Some examples of averages are the TSE 300 Index , Dow Jones Industrial Average and The Russell 100.

This Glossary of financial terms was created by Fiscal Agents Financial Information Services, Research Department. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, mechanical, electronic, photocopying, recording, or otherwise, without the prior written permission of Fiscal Agents. Copyright Fiscal Agents © 2000. All Worldwide Rights Reserved. Click to contact Glossary editor or see the permissions page.