D to H




Debt instrument issued by corporations, municipalities or governments. A debenture is a promise to pay interest and repay the principal and is not secured by one or more of the issuer's assets. It is secured only by the issuer's credit standing.


Amount of money that must be repaid with interest. Corporate debt often includes bonds and other debt instruments.

Debt security

Security representing an investor's loan to an issuer who commits to repaying the principal plus interest. Debt securities may include debt instruments, debentures, Treasury bills and commercial paper.

Deferred annuity

Contract generally sold by a life insurance company that provides the beneficiary or annuitant with regular payments as of a future agreed-upon date. The contract is generally bought through a series of payments over a given period. The period ends before the annuity payment begins.

Deferred profit-sharing plan (DPSP)

A profit-sharing plan under which an employer sets aside a portion of profits for the benefit of employees based on the company's net earnings.


Sustained decline in the average level of prices throughout the economy.

Defined benefit pension plan

Plan that guarantees a specified level of retirement income to each participant, based on the participant's salary and number of years of service.

Defined contribution pension plan

Plan that does not guarantee a specified level of retirement income to each participant. Benefits are based on the income derived from the investment of the contributions.


Investment instrument whose value is based on an underlying asset, index or other investment.


The difference between a bond's par value and its selling price on the secondary market.


Mutual fund payments made to unitholders based on interest or dividend income or on realized capital gains on securities.

Distribution date

Date on which a mutual fund pays out a distribution to unitholders. Distribution dates are important for tax purposes. For example, investors who bought fund units just before the distributions are required to declare the gains.


Investment strategy designed to reduce risk by spreading assets among various types of investments and purchasing shares issued by various corporations that operate in different sectors or geographic areas.

It is important not to confuse “dispersion” and “diversification”.

Diversification Dispersion
The allocation of assets across different asset classes within an investment portfolio The dispersal of assets across different financial institutions.


Amount of earnings distributed by a corporation to its shareholders based on the number of shares they hold. The dividend paid on preferred shares is generally a set amount, whereas the dividend paid on common shares varies according to corporate earnings. A corporation is not legally required to declare dividends.

Dividend fund

Mutual fund that invests in first preferred shares and common shares that generally pay regular dividends at above-average rates.

Dividend tax credit

A tax credit given to Canadian investors on the dividends they receive from taxable Canadian corporations as an incentive to invest in those corporations.

Dollar cost averaging

Plan to reduce the average share or unit cost by investing set amounts on a regular basis. The investor buys more shares or units when prices are low and fewer when prices are high.

Dow Jones Industrial Index

Index that tracks the performance of 30 large U.S. corporations, generally industry leaders.


Earned income

For tax purposes, the income earned by an individual is generally made up of employment income and certain taxable benefits. The maximum RRSP contributions are based on the earned income.

Earnings per share

Earnings per share are calculated by dividing a corporation's net income (or earnings) over the past 12 months by the number of outstanding shares. For example, if a corporation earned $10 million and has 5 million shares outstanding, it would report earnings of $2 per share.

Economic conditions

More or less regular fluctuations in economic activity, marked by four successive phases:

  1. contraction or recession
  2. depression
  3. expansion
  4. recovery or stagnation

Equity fund

Mutual fund that invests primarily in common stocks.

European Union

Created in 1992 by the Maastricht Treaty, the EU consists of the following 15 countries: Germany, Austria, Belgium, Denmark, Spain, Finland, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, the United Kingdom and Sweden.


Said of stock that does not include any dividend.

Expense ratio

Total mutual fund operating expenses, expressed as a percentage of the net asset value of the fund. The expense ratio includes management fees and other fund expenses such as brokerage commissions as well as audit and legal fees charged directly to the fund. The published rates of return are calculated after the expense ratio is deducted.


Fair market value

Price agreed-upon by two rational and willing parties. Serves as an asset valuation standard in the event of a possible sale.

Financial adviser

Firm or individual that sells investment advice in exchange for fees.

Fiscal policy

The federal government's economic management policy based on spending and taxation.

Fixed amount withdrawal plan

Plan offered by mutual fund companies whereby an investor receives fixed payments from his investment. The interval between each payment is generally one month or one quarter.

Fixed asset

Tangible property with a relatively long or permanent existence, such as land or buildings, that is intended to be used rather than converted or resold.

Fixed period withdrawal plan

Plan offered by mutual fund companies whereby an investor's assets are returned in total by the end of the plan in the form of regular withdrawals over a specified period. A determined amount of capital, plus accrued income, is withdrawn automatically.

Forward contract

Contract that is similar to a futures contract but is traded on the over-the-counter market. The seller agrees to deliver a commodity or a financial instrument at a particular price and at a stipulated future date.

Front-end load fund

Mutual funds that charge a fee at the time units are purchased.

Fundamental analysis

Value analysis based on fundamental data from a corporation's financial statements and on market conditions.

Futures contract

Contract in which the seller agrees to deliver a specific commodity or financial instrument at a particular price and at a stipulated future date. Futures contracts are traded on the stock market. Unlike a forward contract, terms and conditions are standardized by the stock market.


Global equity fund

This type of fund invests in several international stock markets, including the U.S. Its objective is to generate long-term capital growth and provide protection against a devaluation of the Canadian dollar.

Goldman Sachs Financial Services Index

Market capitalization-weighted index designed to measure the performance of corporations in the financial services sector. The index focuses on financial institutions that offer regional banking services, trust and banking services in financial centres as well as financial services for corporate and retail clients, such as credit cards, real estate investments and mortgage loans. The index also includes brokerage firms and asset managers, insurance companies (including brokers, life insurance, property and casualty insurance, disability insurance and reinsurance), real estate management and development firms, real estate brokerages and investment companies.

Goldman Sachs Global Technologies Index

Index that includes some 200 global corporations that are dominant in the technology sector. The index is divided into six different sectors: computer hardware, software, semiconductors, multimedia equipment, computer services and the Internet.

Gross domestic product (GDP)

Value of all goods and services produced in a country over one year.

Growth stock

Stock of a corporation expected to show faster-than-average gains in earnings. This type of stock often sports a very high price/earnings ratio given that investors are willing to bid higher for a better growth outlook.

Guaranteed investment certificate (GIC)

Security issued by most financial institutions stating that a specific amount was invested at a specified interest rate for a stated term.




HSBC Euro Smaller Companies Index

Index that includes approximately 2,000 European stocks. The market capitalization of the stocks varies between 225 million and 3.5 billion euros.