Tag: bond

Total Return Index definition explanation

What is Total Return Index?
A type of equity index that tracks both the capital gains of a group of stocks over time, and assumes that any cash distributions, such as dividends, are reinvested back into the index. Looking at an index’s total return displays a more accurate representation of the index’s performance. By assuming dividends are reinvested, you effectively have accounted for stocks in an index that do not issue dividends and instead, reinvest their earnings within the underlying company. Read more for examples and further explanation including related video clips and also comments
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Registered Retirement Savings Plan – RRSP definition explanation

What is Registered Retirement Savings Plan – RRSP?
A legal trust registered with the Canada Revenue Agency and used to save for retirement. RRSP contributions are tax deductible and taxes are deferred until the money is withdrawn. An RRSP can contain stocks, bonds, mutual funds, GICs, contracts and even mortgage-backed equity.

RRSPs have two main tax advantages:

1. Contributors deduct contributions against their income. For example, if a contributor’s tax rate is 40%, every $100 he or she invests in an RRSP will save that person $40 in taxes, up to his or her contribution limit.

2. The growth of RRSP investments is tax sheltered. Unlike with non-RRSP investments, returns are exempt from any capital-gains tax, dividend tax or income tax. This means that investments under RRSPs compound at a pretax rate. Read more for examples and further explanation including related video clips and also comments
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Death Put definition explanation

What is Death Put?
An optional redemption feature on a debt instrument allowing the beneficiary of the estate of the deceased to put (sell) the bond (back to the issuer) in the event of the beneficiary’s death or legal incapacitation. Also known as a “”survivor’s option””. Read more for examples and further explanation including related video clips and also comments
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Alpha Generator definition explanation

What is Alpha Generator?
Any security that, when added to an existing portfolio of assets, generates excess returns or returns higher than a pre-selected benchmark without additional risk. An alpha generator can be any security; this includes government bonds, foreign stocks, or derivative products such as stock options and futures. Read more for examples and further explanation including related video clips and also comments
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Turnover Ratio definition explanation

What is Turnover Ratio?
The percentage of a mutual fund or other investment vehicle’s holdings that have been “”turned over”” or replaced with other holdings in a given year. The type of mutual fund, its investment objective and/or the portfolio manager’s investing style will play an important role in determining its turnover ratio. Read more for examples and further explanation including related video clips and also comments
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Maturity by Maturity Bidding – MBM definition explanation

What is Maturity by Maturity Bidding – MBM?
A bond auction that allows bidders (who are underwriters) to submit bids for selected maturities in its issue, rather than requiring buyers to bid for the entire issue on an all-or-none (AON) basis. Read more for examples and further explanation including related video clips and also comments
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Equity definition explanation

What is Equity?
1. A stock or any other security representing an ownership interest.

2. On a company’s balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also referred to as “”shareholders’ equity””.

3. In the context of margin trading, the value of securities in a margin account minus what has been borrowed from the brokerage.

4. In the context of real estate, the difference between the current market value of the property and the amount the owner still owes on the mortgage. It is the amount that the owner would receive after selling a property and paying off the mortgage.

5. In terms of investment strategies, equity (stocks) is one of the principal asset classes. The other two are fixed-income (bonds) and cash/cash-equivalents. These are used in asset allocation planning to structure a desired risk and return profile for an investor’s portfolio. Read more for examples and further explanation including related video clips and also comments
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Loan Credit Default Swap – LCDS definition explanation

What is Loan Credit Default Swap – LCDS?
A type of credit derivative in which the credit exposure of an underlying loan is swapped between two parties. A loan credit default swap’s structure is the same as a regular credit default swap, except that the underlying reference entity is limited strictly to syndicated secured loans, rather than any loan or bond.

Also know as a “”loan-only credit default swap””. Read more for examples and further explanation including related video clips and also comments
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