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94 Cards in this Set
- Front
- Back
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after market stabilization
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a type of arrangement where the dealer supports the offer price of a newly issued stock once it begins trading in the secondary market.
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authorized shares
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the maximum number of common or preferred shares that a corporation may issue under the terms of its charter.
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banking group
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a group of investment firms, each of which individually assumes financial responsibility for
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blue sky
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a slang term for laws that various canadian provinces and american states have enacted to protect the public against securities frauds. this term is used to indicate that a new issue has been cleared by a securities commission and may be distributed.
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bought deal
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a new issue of stocks or bonds bought from the issuer by an investment dealer, frequently acting alone, for resale to its clients, usually by way of a private placement or short form prospectus. the dealer risks its own capital in the bought deal. in the event that the price has to be lowered to sell out the issue, the dealer absorbs the loss.
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broker of record
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the broker named as the official advisor to a corporation on financial matters; has the right of first refusal on any new issues.
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capital pool company
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a vehicle to provide businesses with an opportunity to obtain financing earlier in their development than might be possible with a regular IPO. also known as the CPC
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capital stock
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all shares representing ownership of a company, including preferred as well as common. also referred to as equity capital.
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competitive tender
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a distribution method used in particular by the bank of canada in distributing new issues of government marketable bonds. bids are requested from primary distributors and the higher bids are awarded the securities for distribution.
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continuos disclosure
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in ontario, a reporting issuer must issue a press release as soon as a material change occurs in its affairs and, in any event, within ten days.
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corporation
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a form of business organization created under provincial or federal statutes which has a legal identity separate from its owners. the owners (shareholders) have no personal liability for its debts.
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covenants
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a pledge in a bond indenture indicating the fulfillment of a promise or agreement by the company issuing the debt. an example of this may include the promise not to issue anymore debt.
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delayed opening
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postponement in the opening of trading of a security the result of a heavy influx of buy and/or sell orders.
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delisiting
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removal of a security's listing on a stock exchange
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direct bond
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this term is used to describe bonds issued by governments that are firsthand obligations of the government itself.
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due diligence report
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when negotiations for a new issue of securities begin between a dealer and corporate issuer, the dealer normally prepares a due diligence report examining the financial structure of the company.
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escrowed shares
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outstanding shares of a company which, while entitled to vote and receive dividends may not be bought or sold unless special approval is obtained. mining and oil companies commonly use this technique when treasury shares are issued for new properties.
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exchange offering prospectus
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a different form of prospectus may be used when shares are distributed through the facilities of canadian stock exchanges. companies already listed may use this less detailed type of prospectus.
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final prospectus
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the prospectus which supersedes the preliminary prospectus and is accepted for filing by applicable provincial securities commissions. the final prospectus shows all required information pertinent to the new issue and a copy must be given to each first time buyer of the new issue.
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financing
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the purchase for resale of a security issue by one or more investment dealers. the formal agreement between the investment dealer and the corporation issuing the securities is called the underwriting agreement.
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fiscal agency
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an investment company or government used to advise financial matters and to manage the underwriting of securities.
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general partnership
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the general partners are involved in the day to day operations and are personally liable for all debts and obligations incurred in the course of business.
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government securities distributor
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the only institution recognized and permitted to submit bids to the bank of canada.
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greensheet
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highlights for the firms sales representatives the salient features of a new issue, both pro and con in order to successfully solicit interest to the general public. dealers prepare this information circular for in-house use only.
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halt in trading
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a temporary halt in the trading of a security to allow significant news to be reported and widely disseminated. usually the result of a pending merger or a substantial change in dividends or earnings.
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information circular
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document sent to shareholders with a proxy, providing details of matters to come before a shareholders' meeting.
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initial public offering
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a new issue of securities offered to the public for investment for the very first time. also known as IPO
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issued shares
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the part of authorized shares that have been sold by the corporation and held by the shareholders of the company.
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limited partnership
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a type of partnership whereby a limited partner cannot participate in the daily business activity and liability is limited to the partners investment.
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listing agreement
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a stock exchange document published when a company's shares are accepted for listing. it provides basic information on the company, its business, management, assets, capitalization and financial status.
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material fact
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any information that significantly affects, or would reasonably be expected to have a significant effect on, the market price of the securities being offered.
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negotiated offering
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a term describing a particular type of financing in which the investment dealer negotiates with the corporation on the issuance of securities. the details would include the type of security to be issued, the price, coupon or dividend rate, special features and protective provisions.
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NEX
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a new and separate board of the TSX venture exchange that provides a trading forum for companies that have fallen below the venture exchanges listing standards. companies that have low levels of business activity or who do not carry on active business with trade on this board, while companies that are actively carrying on business will remain with the main TSX venture exchange list.
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no par value
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indicates a common stock has no stated face value.
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non-competitive tender
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a method of distribution used in particular by the bank of canada for government of canada marketable bonds. primary distributors are allowed to request bonds at the average price of the accepted competitive tenders. there is no guarantee as to the amount, if any, received in response to this request.
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outstanding shares
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the part of issued shares which remains outstanding in the hands of the investors.
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over-allotment option
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an activity used to stabilize the aftermarket price of a recently issued security. if the price increases above the offer price, dealers can cover their short position by exercising an this option by either increasing demand in the case of covering a short position or increasing supply in the case of this option exercise. also known as the green shoe option
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override
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in an underwriting, the additional payment the financing group receives over and above their original entitlement for their services as financial advisors and syndicate managers or leads.
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partnership
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a form of business organization that involves two or more people contributing to the business and legislated under the federal partnership act
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preliminary prospectus
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the initial document released by an underwriter of a new securities issue to prospective investors.
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primary dealers
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government securities distributors that maintain a certain threshold of activity.
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primary offering
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the original sale of any issue of a company's securities
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private offering
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the original sale of any issue of a company's securities to a few buyers
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prospectus
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a legal document that describes securities being offered for sale to the public. must be prepared in conformity with requirements of applicable securities commissions.
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protective provisions
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a protective clause a dealer offers about the security's specific attributes.
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proxy
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written authorization given by a shareholder to someone else, who need not be a shareholder, to represent him or her and vote his or her shares at a shareholder's meeting.
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public float
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that part of the issued shares that are outstanding and available for trading by the public, and not held by company officers, directors, or investors who hole a controlling interest in the company. this is also different then a company's outstanding shares as it also excludes those shares owned in large blocks by institutions.
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red herring prospectus
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a preliminary prospectus so called because certain information is printed in red ink around the border of the front page. it does not contain all the information found in the final prospectus. its purpose: to ascertain the extent of public interest in an issue while it is being reviewed by a securities commission.
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reporting issuer
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usually, a corporation that has issued or has outstanding securities that are held by the public and is subject to continuos disclosure requirements of securities administrators.
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selling group
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investment dealers or others who assist a banking group in marketing a new issue of securities without assuming financial liability if the issue is not entirely sold. the use of this group widens the distribution of a new issue.
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short form prospectus
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a form of the prospectus that contains information not previously disclosed to regulators. it contains by reference the material filed by the corporation in the annual information form.
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short position
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created when an investor sells a security that he or she does not own.
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sole proprietorship
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a form of business organization that involves one person running a business whereby the individual is taxed on earnings at their personal income tax rate.
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statement of material facts
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a document presenting the relevant facts about a company and compiled in connection with an underwriting or secondary distribution of its shares. it is used only when the shares underwritten or distributed are listed on a recognized stock exchange and takes the place of a prospectus in such cases.
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suspension of trading
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an interruption in the trading imposed on a company if their financial condition does not meet an exchange's requirements for continued trading or if the company fails to comply with the terms of its listening agreement
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syndicate
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a group of investment dealers who together underwrite and distribute a new issue of securities or a large block of an outstanding issue.
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transparency
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to maintain regularity and openness , or clarity in ones debt operations.
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tombstone advertisements
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a written advertisement placed by the investment bankers in a public offering of securities as a matter of record once the deal has been completed.
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treasury shares
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authorized but unissued stock of a company or previously issued shares that have been reacquired by the corporation. the amount still represents part of those issued but is not included in the number of shares outstanding. these shares may be resold or used as part of the option package for management. these shares do not have voting rights nor are they entitled to dividends.
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trust deed
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this is the formal document that outlines the agreement between the bond issuer and the bondholders. it outlines such things as the coupon rate, if interest is paid semi annually and when, and any other terms and conditions between both parties.
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trust deed restrictions
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these appear in a legal document called a trust deed.
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trustee
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for bondholders, usually a trust company appointed by the company to protect the security behind the bonds and to make certain that all covenants of the trust deed relating to the bonds are honoured.
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underwriting
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the purchase for resale of a security issue by one or more investment dealers or underwriters. the formal agreements pertaining to such a transaction are called underwriting agreements.
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voting trust
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an arrangement to place the control of a company in the hands of certain managers for a given period of time, or until certain results have been achieved, by shareholders surrendering their voting rights to a trustee for a specified period of time.
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waiting period
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the period of time between the issuance of a receipt for a preliminary prospectus and receipt for a final prospectus from the securities administrators.
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amortization
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gradually writing off the value of an intangible asset over a period of time. commonly applied to items such as goodwill, improvements to leased premises, or expenses of a new stock or bond issue.
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asset
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everything a company or a person owns or has owed to it. a statement of financial position category.
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book value
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the amount of net assets belonging to the owners of a business (or shareholders of a company) based on statement of financial position values. it represents the total value of the company's assets that shareholders would theoretically receive if a company were liquidated. also represents the original cost of the units allocated to a segregated fund contract.
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capitalizing
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recording an expenditure initially as an asset on the balance sheet rather than as an expense on the income statement and then writing it off or amortizing it over a period of years.
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inventory
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the goods and supplies that a company keeps in stock. a balance sheet item
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cost accounting method
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used when a company owns less than 20% of a subsidiary.
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cost of sales
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a income statement account representing the cost of buying raw materials that go directly into producing finished goods.
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current asset
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cash and assets which in the normal course of a business would be converted into cash, usually within a year, e.g. accounts receivable, inventories. a balance sheet category.
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current liabilities
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money owed and due to be paid within a year, e.g. accounts payable. a balance sheet category.
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declining balance method
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this method applies a fixed percentage, rather than a fixed dollar amount, to the outstanding balance to determine the expense to be charged in each period. think of a amortization method.
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deferred tax liabilities
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the income tax payable in future periods. these liabilities commonly result from temporary differences between the book value of assets and the liabilities as reported on the balance sheet and the amount attributed to that asset or liability for income tax purposes.
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depletion
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refers to consumption of natural resources that are part of a company's assets. producing oil, mining and gas companies deal in products that cannot be replenished and as such are known as wasting assets.
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depreciation
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systematic charges against earnings to write off the cost of an asset over its estimated useful life because of wear and tear through use, action of the elements, or obsolescence. it is a bookkeeping entry and does not involve the expenditure of cash
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equity
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ownership interest in a corporation's stock that represents a claim on its revenue and assets.
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first in first out
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inventory items acquired earliest are sold first. also known as FIFO
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goodwill
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generally understood to represent the value of a well respected business - its name, customer relations, employee relations, among others. considered an intangible asset on the balance sheet.
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intangible asset
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an asset having no physical substance (e.g. goodwill, patents, franchises, copyrights).
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investment in associates
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the ownership a company has in another company. as a general rule, significant influence is presumed to exist when a company owns 20% or more of the voting rights of the other company.
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liabilities
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debts or obligations of a company, usually divided into current liabilities - those due and payable within one year - and long-term liabilities - those payable after one year.
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retained earnings
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the cumulative total of annual earnings retained by a company after payment of all expenses and dividends. the earnings retained each year are reinvested in the business.
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share capital
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the money that is paid in by the shareholders
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share of profit of associates
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a company's share of an unconsolidated subsidiary's revenue. the equity accounting method is used when a company owns 20% to 50% of a subsidary.
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straight-line method
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the most common amortization method in canada. used when an equal amount is charged to each period.
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statement of cash flow
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a financial statement which provides information as to how a company generated and spent its cash during the year. assists users of financial statements in evaluating the company's ability to generate cash internally, repay debts, reinvest and pay dividends to shareholders.
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statement of changes in equity
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a financial statement that shows the total comprehensive income kept in the business year after year.
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statement of comprehensive income
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a financial statement which shows a company's revenues and expenditures resulting in either a profit or a loss during a financial period.
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statement of financial position
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a financial statement showing a company's assets, liabilities, and equity on a given date. also known as a balance sheet.
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trade payables
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money owed by a company for goods or services purchased, payable within one year. a current liability on the statement of financial position
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trade receiveables
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money owed to a company for goods and services it has sold, for which payment is expected within one year. a current asset on the statement of financial position
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