CSC (AACN) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Canadian Securities Administrators

An umbrella organization of provincial and territorial securities regulators that harmonizes regulation across Canada; it has no direct statutory authority, which remains with each province.

CIRO

The Canadian Investment Regulatory Organization, formed in 2023 by amalgamating IIROC and the MFDA, is the national self-regulatory body overseeing investment dealers and mutual fund dealers.

CIPF coverage limit

The Canadian Investor Protection Fund covers up to $1 million per client per member firm for losses caused by a member's insolvency, not for market losses.

T+1 settlement

Canada adopted a one-business-day settlement cycle in May 2024, meaning trades settle one business day after execution rather than two.

Prospectus

A formal disclosure document filed with securities regulators that must accompany a distribution of new securities, giving investors full, true and plain disclosure of all material facts.

Accredited investor

A prospectus-exemption category including individuals with income above $200,000 ($300,000 combined) or financial assets over $1 million, or net assets over $5 million.

Alternative trading system

A private trading venue registered as an ATS that matches buyers and sellers outside a recognized exchange; examples in Canada include dark pools operated by dealers.

Best execution obligation

The duty of a dealer to obtain the most advantageous execution terms reasonably available for client orders, considering price, speed, certainty and cost.

Bond price-yield relationship

Bond prices move inversely to yields: when market interest rates rise, fixed-coupon bond prices fall, and the effect is larger for longer maturities and lower coupons.

Segregated fund guarantee

An insurance contract wrapping a mutual fund that guarantees at least 75% of deposits at maturity and 100% at death, subject to reset provisions.

Preferred share

Equity that typically pays a fixed dividend and ranks ahead of common shares for dividends and assets, usually without voting rights; dividends are declared at the board's discretion.

ETF creation and redemption

Authorized participants exchange baskets of securities for ETF shares, an arbitrage process that keeps the ETF's market price close to its net asset value.

NAV per share

The value of a fund's total assets minus liabilities divided by shares outstanding, calculated at the end of each trading day for pricing purchases and redemptions.

Treasury bill

A short-term government debt security sold at a discount and maturing in one year or less; it pays no coupon and is considered very low credit risk.

Strip bond

A bond whose coupons have been separated from the principal and sold individually; it pays no interest before maturity and is taxed annually on accrued interest.

Liquid alternative fund

A Canadian mutual fund permitted to use leverage, short selling and derivatives up to specified limits, offering hedge-fund-like strategies with daily redemption.

Gordon growth model

Values a stock as P0 = D1 / (k - g), where D1 is next year's dividend, k the required return and g the constant dividend growth rate.

Sustainable growth rate

The rate a firm can grow using retained earnings without new equity: g = ROE x retention ratio, where retention ratio equals 1 minus the dividend payout ratio.

Modified duration

Measures a bond's percentage price change for a 1% change in yield; modified duration equals Macaulay duration divided by one plus the yield per period.

CAPM

The Capital Asset Pricing Model estimates required return as the risk-free rate plus beta times the market risk premium, pricing only systematic risk.

Sharpe ratio

Excess portfolio return above the risk-free rate divided by the portfolio's standard deviation; higher values indicate better return per unit of total risk.

Jensen's alpha

The difference between a portfolio's actual return and the return CAPM predicts given its beta; a positive alpha suggests outperformance after adjusting for market risk.

Put-call parity

For European options: call price minus put price equals stock price minus the present value of the strike; deviations create arbitrage opportunities.

Current ratio

Current assets divided by current liabilities; it measures a company's ability to meet short-term obligations, with higher values generally indicating greater liquidity.

Investment policy statement

A written document setting out a client's objectives, risk tolerance, constraints and permitted asset allocation, guiding all decisions for the account and reviewed regularly.

Systematic risk

Risk from factors affecting the whole market, such as interest rates or recessions; it cannot be diversified away and is measured by beta.

TFSA contribution room

Annual contribution room is set by legislation and accumulates for unused amounts; withdrawals are tax-free and generally restore room the following calendar year.

RRSP contribution limit

Contribution limit is 18% of the prior year's earned income, capped at an annual maximum, minus any pension adjustment, plus unused room carried forward.

RESP grant

The Canada Education Savings Grant adds 20% of annual contributions up to $500 per year, to a lifetime maximum of $7,200 per child.

Rebalancing

Periodically restoring a portfolio's asset weights to target levels, which controls risk and enforces a disciplined sell-high, buy-low process.

Capital gain

The profit realized when an investment is sold for more than its adjusted cost base; the taxable portion is included in income at the investor's marginal rate.

Risk tolerance

A client's willingness and financial ability to accept volatility in portfolio value, determined through KYC assessment and central to establishing the asset allocation.