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TAKE-OVER BID
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An offer made to security holders of a company to purchase voting securities of the company that together with the offerors already owned securities will in total, exceed 20% of the outstanding voting securities of the company. For companies that are federally incorporated, the threshold is more than 10% of the outstanding voting shares of the target company.
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TARIFF
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Customs duties on merchandise imports, levied on a percentage of value or specific basis (e.g. $5 per 100 kilograms). Tariffs give a price advantage to similar locally produced goods and raise revenues for the government.
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TAX CREDIT
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An amount deducted directly from income tax that would be otherwise payable. Examples include the disability tax credit, the married credit for individuals and the scientific research and experimental development investment tax credit for corporations.
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TAX DEDUCTION
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An amount deducted from total income to arrive at taxable income. Childcare expenses and capital cost allowances are examples of tax deductions.
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TAX DEFERRAL
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A deferral of income taxes from the current taxation year to a later year. Registered pension plans (RPPs), deferred profit-sharing plans (DPSPs), registered education savings plans (RESPs) and registered retirement savings plans (RRSPs) all provide tax deferrals. Income contributed to an RRSP, for example, is not taxed (because of the RRSP deduction) in the year the contribution is made. However, it is taxed in a later year when the proceeds are withdrawn from the RRSP. Likewise, investment income earned on the contribution is taxed at the time of withdrawal rather than each year as it is earned. With RESPs, there is no tax deferral on the income contributed, only on the investment earnings in the plan.
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TAX LOSS CARRY-BACK
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A technique for receiving a refund of taxes paid by applying a deduction or credit from a current year to a prior year.
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TAX LOSS CARRY-FORWARD
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A technique for applying a loss or credit from the current year to a future year.
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TAX LOSS SELLING
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Selling securities at less than their original purchase price in a portfolio to realize losses in order to offset gains in either the current year or prior years.
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TAX SHELTER
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Any investment sold on the basis that the buyer receives accelerated tax deductions or credits. Flow-through shares are examples of tax shelters.
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TAXABLE CAPITAL GAIN
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The portion of capital gain realized during the year that is required to be included in income. This is equal to one half of the net capital gain. If a share is bought at $24 and sold at $30, there is a capital gain of $6. Currently the taxable capital gain is one half of this amount, or $3. This is the amount that is included in income.
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TAXABLE INCOME
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The amount of income subject to taxes. This is determined by subtracting the appropriate deductions from adjusted gross income.
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T-BILL
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See Treasury Bill.
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TECHNICAL ANALYSIS
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A method of evaluating securities by relying on the assumption that market information, such as charts of price, volume, and open interest, can help predict future (normally short-term) market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered.
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TED-SPREAD
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The difference between the rate for Treasury Bills and the rate for Eurodollar Bills. The resulting price discrepancy is an indicator of credit risk. An increasing TED spread is thought to indicate increasing risk, while a decreasing one is thought to indicate decreasing risk.
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TEN-BAGGER
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A stock, which rises tenfold.
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TERM
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A period of time, such as for a policy, bond or contract.
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TERM TO MATURITY
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The amount of time between now and when a bond matures.
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TERMINAL VALUE
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The value of any item at the end of a specified time period. Examples include the maturity value of a bond and the value of a fully depreciated asset.
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THEORETICAL VALUE
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In options pricing, the hypothetical value of an option as calculated by the Black-Scholes Option Pricing Model.
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THE STREET
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An informal term for Bay Street in Canada and Wall Street in the U.S. It is often used to make reference to the major markets as a larger entity.
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THIN MARKET
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A market in which there are comparatively few bids to buy and/or offers to sell. The phrase may apply to a single security or to the entire market. In a thin market, price fluctuations between trades are usually larger than if the market was liquid. A thin market in a particular stock may reflect a lack of interest in that issue, or a limited supply of the stock.
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TICKER SYMBOL
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A system of letters used to uniquely identify a stock or investment fund. Symbols with up to three letters are used for stocks that are listed and traded on an exchange.
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TIGHT MONETARY POLICY
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A central bank policy designed to curb inflation by reducing the reserves of commercial banks (and as a result the money supply through open market operations) or through an increase in short-term administered interest rates.
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TIME HORIZON
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The expected period of time a sum of money is invested. It is also called investment horizon or time horizon.
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TIME VALUE OF MONEY
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The idea that a dollar now is worth more than a dollar in the future, even after adjusting for inflation, because a dollar now can earn interest until the time the dollar in the future would be received.
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TOP DOWN MANAGEMENT STYLE
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An investment strategy which first finds the best sectors or industries to invest in and then searches for the best companies within those sectors or industries.
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TORONTO STOCK EXCHANGE (TSX)
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The largest stock exchange in Canada, which has over 1,700 companies listed on the exchange.
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TOTAL RETURN INDEX
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An Index that calculates the performance of a group of stocks assuming that all dividends and distributions are reinvested. This method is usually considered a more accurate measure of actual performance than if dividends and distributions were ignored.
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TRACKING ERROR
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When using an indexing strategy, the amount by which the performance of the portfolio differed from that of the benchmark.
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TRACKING STOCK
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Shares issued by a company to track the performance of a division in the parent company. The genesis of tracking stocks was to enhance the value of the parent company by creating a trading stock that shareholders would presumably pay a higher value for and thus shareholder value would be enhanced.
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TRADE DEFICIT
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A negative balance of trade that occurs when imports exceed exports. Opposite of trade surplus.
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TRADE-WEIGHTED CANADIAN EXCHANGE RATE
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Rate produced by the Bank of Canada that measures the Canadian currency’s movements against ten major currencies and weighted according to Canada’s trade with its trading partners.
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TRADER
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An employee of a securities firm who executes buy and sell orders for the firm and its clients on a recognized stock exchange. Also may refer to a client who buys and sells frequently with the objective of making a short-term profit.
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TRAILER FEE
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Fee that a fund manager pays to the individual and/or organization that sold the fund for providing services such as investment advice, tax guidance and financial statements to investors. The fee is paid annually and continues for as long as the investor holds units in the fund.
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TRAILING P/E
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Price/earnings ratio, using earnings for the four most recently completed quarters. The interpretation of a P/E is the number of years it would take an investor to receive back in earnings the price that the investor paid for the security.
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TRANCHE
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A portion of a bond offering grouped by maturity; also refers to venture capital investments made in
stages or tranches.
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TRANSACTION DATE
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The date on which a purchase or sale of a security takes place.
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TRANSFER AGENT
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An agent employed by a corporation and/or mutual fund to maintain shareholder records, including purchases, sales and account balances.
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TREASURY BILL (T-BILL)
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Government of Canada T-bills issued in denominations ranging from $1,000 to $1,000,000. T-bills with terms to maturity of 3, 6 or 12 months are auctioned on a bi-weekly basis, typically on Tuesday for delivery on Thursday. Treasury bills bear no interest, but are sold at a discount. The difference between the purchase price and the face amount represents the return to the investor.
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TREND
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Shows the general movement or direction of securities prices. The long-term price or trading volume of a particular security is either up, down or sideways.
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TREYNOR INDEX
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A measure of a portfolio's excess return per unit of risk and is equal to the portfolio's rate of return minus the risk-free rate of return, divided by the portfolio's beta.
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TRIPLE WITCHING HOUR
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The final hour of the stock market trading session on the third Friday of March, June, September, and December, when both options and futures contracts expire on market indices used by program traders. The simultaneous expirations often set off heavy trading of options, futures and the underlying stocks.
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TRUST
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An arrangement under which a person or company holds money or other property, usually a trust company, for the benefit of another person or persons. These assets are administered according to the terms of the trust agreement. Each province has a trustee act, which regulates the kinds of investments that can be made by the trustees of a trust fund.
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TRUST COMPANY
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A financial institution that operates under either provincial or federal jurisdiction and conducts the same activities as a bank. Like a bank, it operates through a network of branches. However, because of its fiduciary role, a trust company is able to administer estates, trusts, pension plans and agency contracts, which banks cannot.
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TURNOVER RATIO
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Volume of securities traded as a percentage of total securities outstanding.
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