Glossary of Investment Terms

Welcome to the Investment Glossary. We hope you find these terms useful. Should you have a term you would like addressed, please let us know. We would be happy to add it to our list.

Bank Rate The minimum rate at which the Bank of Canada makes short term advances to the chartered banks and other deposit taking institution. The bank rate is set each week at 25 basis points above the average 3-month treasury bill rate (T-Bill).

Basis Point Often called a 'beep', it is used to describe the differences in bond yields. One basis point is one one hundredth of a percentage point i.e. 100 basis points = 1%.

Bear Market A declining stock market over a prolonged period, usually lasting at least six months and normally not more than 18 months. Usually caused by a strong conviction that a weak economy will produce depressed corporate profits.

Blue Chip Usually a large capitalization, well known and actively traded common stock with a record of continuous dividend payments and other desirable investment attributes.

Bond A certificate of debt on which the issuer (corporation or government) promises to pay the holder a specific rate of interest over the life of the bond. At maturity, the principal is repaid in full to the holder.

Book Value of a mutual fund The Book Value is the sum of all purchases and distributions into the fund minus the book value of any redemptions from the fund. It can be calculated by taking the Unit Cost of those purchases or distributions multiplied by the number of units and subtracting the book cost of any redemptions.

Book Value of an account Total book value of all holdings

Bull Market A rising stock market over a prolonged period, usually lasting at least six months and normally not more than 18 months. Usually caused by a strong conviction that a strong economy will produce increased corporate profits.