Knowledge Base

Economy/Finances

Definitions

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C

common shares/common stock*

*Generally, in American English, both words are used interchangeably to refer to financial equities, specifically, securities that denote ownership in a public company. The minor distinction between stocks and shares is usually overlooked, and it has more to do with syntax than financial or legal accuracy.

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Common shares are issued to business owners and other investors as proof of the money they have paid into a company. Of all shareholders, common shareholders have the least claim on a company’s assets.

Owners of common and preferred shares are typically compensated with dividends (money paid to them out of the company’s earnings after tax in return for using their capital). Common shareholders are paid dividends after preferred shareholders. In the event that a company needs to sell off its assets, common shareholders are not paid until all creditors have been satisfied and the preferred shareholders have been reimbursed.

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E

economy

Effective management of a community or system, or especially its resources.
The study of money, currency and trade, and the efficient use of resources.
Frugal use of resources.
The system of production and distribution and consumption. The overall measure of a currency system; as the national economy.

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F

finance

The management of money and other assets.
The science of management of money and other assets.
Monetary resources, especially those of a public entity or a company.
The provision of a loan, payment instalment terms, or similar arrangement, to enable a customer to purchase an item without paying the full amount straight away.

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O

options

Options are financial derivatives that give buyers the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price and date.

Call options and put options form the basis for a wide range of option strategies designed for hedging, income, or speculation.

Options are a versatile financial product. These contracts involve a buyer and a seller, where the buyer pays an options premium for the rights granted by the contract.

Call options allow the holder to buy the asset at a stated price within a specific timeframe. They have a bullish buyer and a bearish seller.

Put options allow the holder to sell the asset at a stated price within a specific timeframe. They have a bearish buyer and a bullish seller.

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P

preferred shares

Preferred shares are issued to business owners and other investors as proof of the money they have paid into a company

Like common stock, preferred share investments are unsecured, but they are issued with specific terms of payment. Payments occur in the form of dividends. The payments are not a legal requirement until they are declared by the company.

Preferred shareholders stand ahead of common shareholders in the payment of dividends and they have a priority claim to assets if the company is liquidated. They are paid as soon as all obligations to creditors have been met. Common shareholders come after. It is this “preferential” treatment that explains the name of the holders of these shares.

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R

retail investor [1]

Retail investors are sometimes also called individual investors or retail traders. These are non-professional investors who purchase assets such as stocks, bonds, securities, mutual funds, and exchange traded funds (ETFs). They are only able to make these purchases by going through another party such as a brokerage firm, investment adviser, investment manager, or other financial professional. These are individuals who tend to be motivated to invest because they are looking to safeguard their future and build their personal wealth through an investing strategy.

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retail investor [2]

A retail investor, also known as an individual investor, is a non-professional investor who buys and sells securities or funds that contain a basket of securities such as mutual funds and exchange traded funds (ETFs).

Retail investors execute their trades through traditional or online brokerage firms or other types of investment accounts. Retail investors purchase securities for their own personal accounts

Retail investors are non-professional market participants who generally invest smaller amounts than larger, institutional investors.

Due to their smaller trades, retail investors may pay higher fees and commissions, although some online brokers offer no-fee trading.

The retail investment market is enormous since it includes retirement accounts, brokerage firms, online trading, and robo-advisors.

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Registered Accounts

Government-registered plans and accounts, like RRSPs, TFSAs and RESPs, let you grow your savings tax-free.

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