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	DAY ORDER A trade order to buy or sell any given security that is valid for only the day the order is given. DAY TRADING The buying and selling (or inversely the short sale and cover) of the same stock on the same day. Also called daylight trade. DAYS SALES OUTSTANDING (DSO) A calculation used to establish whether a company, usually technology-based, is attempting to mask weak sales. The figure is calculated by dividing the accounts receivable by sales for any given quarter, times 91. DATE OF ISSUE See also Issue Date DAX 100 A price-weighted index consisting of Germany’s 100 most heavily traded equities. DBRS See Dominion Bond Rating Service DCF See Discounted Cash Flow Analysis DEAD CAT BOUNCE A rapid, but modest rise in the price of a stock following a steep decline. DEBENTURE Unsecured debt backed only by the credit standing of the borrower, without any form of collateral, which is documented by an agreement called an indenture. DEBT A liability or obligation in the form of bonds, loans, or mortgages, owed to another person or persons, that is required to be paid by a specified maturity date. DEBT/EQUITY RATIO A measure of a company's leverage, calculated by dividing long-term debt by common shareholders' equity, normally using the data from the previous fiscal period end. DEBT-EQUITY SWAP A process in which a corporation exchanges newly issued stock for existing debt, usually in the form of bonds. DEBT FINANCING A means of raising capital in order to finance debt, usually accomplished by selling bonds, bills or notes to individuals and/or institutions. DEBT-TO-GDP RATIO Measurement of the federal debt as a percentage of Canada's gross domestic product. It is a measure of the debt in relation to the economy and the capacity to carry and repay such debt. DEBT INSTRUMENT A written promise to repay a debt. Examples include bills, bonds, notes, CDs, GICs, commercial paper and banker's acceptances. DEBT/TOTAL CAPITAL RATIO A measure of how much debt a company carries in relation to the total capital it holds. DEEMED DISPOSITION These are rules surrounding taxable capital gains on the sale of your assets whether or not an actual sale takes place. For example, deemed disposition normally occurs when you emigrate or die. DEEP-DISCOUNT BOND A bond that sells at a discount of 20% or more from its face value. In the absence of credit concerns with a bond, deep-discount bonds usually are zero-coupon bonds. DEFAULT A bond is in default when the borrower has failed to live up to its obligations under the trust deed of the security with regard to interest, sinking fund payments or has failed to redeem the bonds at maturity. DEFAULT RISK The risk that a debt security issuer will be unable to pay interest on the prescribed date or the principal at maturity. Default risk applies to debt securities not equities since equity dividend payments are not contractual. DEFENSIVE INVESTMENT STRATEGY A portfolio strategy that concentrates on an asset mix designed to minimize the risk of losing principal. This is accomplished by focusing on bonds, cash equivalents and conservative stocks. DEFENSIVE STOCK A stock of a company with a record of stable earnings and continuous dividend payments and which has demonstrated relative stability in poor economic conditions. For example, utility stock values do not usually change from periods of expansion to periods of recession since most individuals use a constant amount of electricity. DEFERRED GAIN The gains earned from an investment (either in interest, dividends or both) that is not taxed until a later date (for example, when you sell a home and reinvest the proceeds in a new home). DEFERRED PROFIT-SHARING PLAN (DPSP) This is a plan registered under the Income Tax Act into which an employer may make tax-deductible contributions, determined by reference to profits, on behalf of their employees. Payments from the plan received by employees are taxable. DEFERRED SALES CHARGE A charge that is paid by an investor when they sell an investment, such as a mutual fund or an annuity during a specific time period. Deferred charges are intended to discourage early withdrawals from investments. Also called back-end load. DEFICIT The shortfall between government revenues and budgetary spending in any given year. A surplus occurs when annual revenues exceed expenditures. DEFINED BENEFIT PENSION PLAN A type of plan that makes available a pension which is generally calculated on either the basis of career average, final average or best average earnings and years of service. These plans do not pay taxes on their investments and in most cases, the employer makes all contributions to the plans. The amount of defined benefit pension that can be provided under a plan registered under the Income Tax Act is limited, in general terms, to the lesser of 2 per cent of the employee's best average earnings and $1,722 per year of service. However, starting in 2005, the existing limit will be indexed to increases in the average wage. DEFINED CONTRIBUTION PENSION PLAN A company retirement plan where the employee elects to contribute some portion of their salary, usually with matching employer contributions, into a plan that will invest for retirement. The total amount that can be contributed per year is the lesser of $13,500 or 18% of the employee’s earnings in that year. Going forward the limits are $14,500 in 2003, $15,500 in 2004, $16,500 in 2005 and $18,000 in 2006. DEFLATION The reverse of inflation, it is the average rate of decrease in the price of goods and services. DELAYED DELIVERY A transaction in which there is a clear understanding that delivery of the securities involved will be delayed beyond the normal settlement period. (Unless otherwise stipulated, sellers of stock must deliver it on or before the third business day after the sale). DELTA A measurement of how much a move in the price of an underlying security affects a change in price of a call option. Also called a hedge ratio. DEMOGRAPHICS Socioeconomic groups that are characterized by: age, sex, income and occupation among other things, which make up a definable group. DEMUTUALIZATION A conversion from a mutually owned company to a stock company, where the company becomes owned by shareholders rather than by voting policyholders. This process is most commonly done in the hopes of both raising additional capital and allowing the company to easily access capital in the future. It is usually seen in the insurance industry. DENOMINATION The principal amount, or value at maturity, of a debt obligation. Also known as the par value or face value. DEPOSIT-TAKING INSTITUTION Any type of financial institution that takes deposits from the public and offers day-to-day banking services such as withdrawals and payments from chequing and/or savings accounts. Examples of these include: banks, trust companies, credit unions and caisse populaires. DEPRECIATION A decrease in the value of an asset over a period of time. DERIVATIVE A financial instrument whose value is dependent on the performance of an underlying instrument or asset typically a commodity, bond or equity. They are also available on currencies, interest rates and equity indices. Futures and options are examples of derivatives. DIAGONAL SPREAD An option strategy that involves the simultaneous purchase and sale of two options where the option sold has a shorter expiry period and is exercisable closer to the money than the option purchased. DIAMONDS An index participation unit that represents the average price performance of 30 blue chip stocks found on the Dow Jones Industrial Average Index. DILUTION A reduction in earnings per share or book value per share, whether actual or potential, through additional share issuances or the offering of options to obtain them. DILUTED EARNINGS PER SHARE The measurement of a company’s earnings per share, taken after accounting for both its common shares and all derivatives of those shares, such as options, rights, warrants, and convertibles. Diluted earnings per share are normally a good measure of the company's real earning power as it shows the investor what the earnings would be, if all derivatives were exercised. DILUTION OF OWNERSHIP The fractional reduction of every shareholders ownership in the corporation as a result of an issuance of additional shares of the company’s stock and/or the conversion of some type of convertible security. DIMINISHING MARGINAL RETURNS An economic theory, that has been maintained by empirical evidence, which states that at a particular point or threshold, increasing units of input to the production process will no longer bear positive consequences equal to the amount being added. These results have been attributed to crowding that make adding available resources less appropriate. DIRECTOR (BOARD OF) An individual elected by a corporation's shareholders who shares legal responsibility in establishing company policies and control of the corporation’s affairs, including selection of operating officers and payment of dividends. DISCLOSURE The release of relevant corporate information that could affect the market value of the securities of a company. DISCOUNT The amount by which a bond sells on the secondary market at less than its par value or face value. DISCOUNT BROKERAGE A brokerage house that charges less than a fullservice brokerage because it does not offer investment advice from analysts and brokers. Typically, discount brokers buy and sell stocks for their customers without recommending choices. However, they may offer general investment advice as well as news and some other services. They usually offer their services over the phone, the Internet and at their offices. DISCOUNT BROKER One who executes buy and sell orders according to the policies and procedures of a discount brokerage house. DISCOUNTED CASH FLOW (DCF) ANALYSIS A technique of evaluating the present value of an investment by estimating future cash flows, while considering the time value of money. Also called capitalization of income. DISCOUNT NOTE A debt security where the return is realized through a discounted selling price relative to the face value of the note at maturity. DISCOUNT RATE The rate of interest on a discount note. DISCRETIONARY ACCOUNT An account for which the client gives authority to buy and sell securities to someone other than themselves. This authority is normally given to a portfolio manager or some other form of investment advisor. The client, in writing, can give full or limited authority (conditional on certain restrictions). These are also called managed accounts. DISCRETIONARY MANAGEMENT A management style where the manager not only deals in stocks on behalf of their clients, but also makes the decisions about what should be purchased and sold for the portfolio. A discretionary manager has authority to execute those decisions within broad client investment guidelines without getting prior approval from the client for each transaction. DISSAVING Using accumulated savings or taking out loans to make purchases of goods and services. DISTRIBUTIONS Payments made to investors from income generated within a fund. They can be composed of regular income, dividends and capital gains. DIVERSIFICATION Allocating the investments of a portfolio across various companies and types of securities, throughout various industries and sometimes in various markets throughout the world in order to minimize portfolio risk. DIVIDEND A portion of a company's profit paid out to common and preferred shareholders, the amount having been decided on by the company's Board of Directors. Dividends are usually paid out quarterly and may be in the form of cash or additional stock. Dividends on preferred stocks are normally fixed while the dividends from common stocks are dependent on the earnings and/or profits of the corporation. For tax purposes, dividends must be declared as income for the year in which they are received. DIVIDEND DISCOUNT MODEL The relationship between a stock's current price and the present value of all future dividend payments. It is used to determine the price at which a stock should be selling based on projected future dividend payments. DIVIDEND FUND A mutual fund that invests in common and preferred shares of senior Canadian corporations with a history of regular dividend payments at or above average rates. DIVIDEND PAYOUT RATIO A ratio expressed as a percentage of the earnings paid out to shareholders (as dividends) over the company’s earnings. DIVIDEND REINVESTMENT PLAN (DRIP) A plan that offers shareholders the ability to automatically reinvest dividends and other realized gains into a company’s stock to accumulate more shares. DIVIDEND TAX CREDIT An income tax credit available to investors who earn dividend income through investments in the shares of Canadian Corporations. DIVIDEND YIELD The annual percentage of return paid to a stockholder by a company. Dividend yield is calculated by dividing the amount of dividends per share by a stock's current market price. For example, if a stock's current price is $40, and the company pays a $5.00 dividend per share per year, then the dividend yield is 12.5 per cent (5/40 = .125, which equals 12.5 per cent). Several popular investing strategies are based on stocks' dividend yield. You can find a stock’s dividend yield in most newspapers. DJIA See Dow Jones Industrial Average DOLLAR COST AVERAGING Buying securities at regular intervals with specific and equal dollar amounts. This results in lowering the average price of securities because more are purchased when the prices are depressed than when they are high. DOGS OF THE DOW The five lowest priced of the ten highest dividend yielding stocks in the Dow Jones Industrial Average (selected on December 31 of each year). DOMINION BOND RATING SERVICE A full-service rating agency that provides credit ratings on issuers of commercial paper, bonds, long/short term debt and preferred shares, as well as asset-backed securities. DBRS also offers industry analysis, rating reports, and ratings indices for issuers and investors throughout Canada, the United States, Europe and Japan. DOUBLE DECLINING BALANCE DEPRECIATION METHOD Method of accelerated depreciation, in which double the straight-line depreciation amount is taken in the first year, and then that same percentage is applied to the undepreciated amount in subsequent years. DOW JONES INDUSTRIAL AVERAGE (DJIA) A price-weighted average of 30 actively traded blue chip stocks on the New York Stock Exchange. Also called the Dow. DOW THEORY A theory of market analysis based upon the performance of the Dow Jones Industrial and Transportation Averages. The theory is that the market is in a basic upward trend if one of these averages advances above a previous important high, accompanied or followed by a similar advance in the other. When both averages dip below previous important lows, this is regarded as confirmation of a basic downward trend. DOWN CAPTURE RATIO Indicates how well an investment does against the benchmark when the benchmark goes down. The Down Capture Ratio is a measure of the investment's compound return when the Benchmark was down, divided by the Benchmark's compound return over the same time period. The lower the value, the better. For example, a fund would have a down capture ratio of .5 if over a 3 year period the fund’s benchmark was down 8% while the fund was only down 4%. DOWNSIDE RISK Measurement of the downside volatility of an investment by calculating the deviation of the investment’s returns below the average return. For example, an investment that has an average return of 4% and a downside risk of 3% will typically have a downside range of returns between 4% to -2%. This would be more desirable than an investment with an average return of 4% and a downside risk of 5%. In the second example the probable downside range of returns is 4% to -6%. Note: Downside risk is similar to standard deviation in that the most probable outcomes are within two deviations from the average return. DPSP See Deferred Profit-Sharing Plan DRILL BIT STOCK Stock prices used to have a fractional component, generally referred to in sixteenths of a dollar. So if a stock price is trading at less than a dollar, it would be quoted using the sixteenths fraction and might sound like a drill bit diameter. Today, no major stocks trade in sixteenths.. DRIP See Dividend Reinvestment Plan DSC See Deferred Sales Charge DSO See Days Sales Outstanding DUE DILIGENCE The process of investigation by the investor into the details of a potential investment, such as an examination of operations and management and the verification of material facts. DUMPING Dumping is the sale of a product for export at a price which is less than the price charged in the ordinary course of trade for the same product when sold in the domestic market of the exporting country. When there are no domestic sales in the ordinary course of trade or when domestic sales are of a low volume, dumping is deemed to occur when the price for export is less than (1) the cost of production plus a reasonable amount for general selling and administrative costs and profits, (2) the price charged on exports to a third country. DURATION This is the average amount of time that it takes to receive interest payments and principal on a fixed income security. It is calculated as the weighted average of the security’s cash flows discounted to the present time. The measure is expressed in years. DUTCH AUCTION An auction where the price of an item is lowered until it gets its first bid and is sold at that price.