A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
   
Back-end load   A sales charge levied when mutual fund units are redeemed.
   
Backspread   A delta-neutral spread composed of more long options than short options on the same underlying asset. This position generally profits from a large movement in either direction in the underlying asset (security).
   
Balance sheet   A financial statement showing the nature and amount of a company's assets, liabilities and shareholders' equity.
   
Balanced fund   A mutual fund which has an investment policy of "balancing" its portfolio, generally by including bonds and shares in varying proportions according to the fund's investment outlook.
   
Balloon   An extra-large amount which may mature in the final year of some serial bond issues.
   
Bankers' acceptance   A type of short-term negotiable commercial paper issued by a non-financial corporation but guaranteed as to principal and interest by a bank. The guarantee results in a higher issue price and consequently a lower yield.
   
Bank rate   The rate at which the Bank of Canada makes short-term loans to chartered banks and other financial institutions. The bank rate also serves as the benchmark for prime rates set by financial institutions.
   
Basis point   One-hundredth of a percentage point. For example, the difference between 5.25% and 5.50% is 25 basis points.
   
BdM   Bourse de Montréal Inc.
   
Bearish   An adjective used to convey that a security, or a market in general, will decline in price — a negative or pessimistic outlook.
   
Bear market   A market characterized by declining prices over a prolonged period of time.
   
Bear spread (call or put)   This strategy can be used with both call and put options. In both cases, you buy an option with a higher exercise price and sell an option with a lower exercise price; the two options usually have the same expiration date.
   
Bearer security   An asset (stock or bond) which does not have the holder's name recorded in the books of the issuing company nor on the asset itself and which is payable to the holder.
   
Beneficial Owner   The real owner of shares (or other assets). An investor may own shares which are registered in the name of a broker, trustee or bank to facilitate transfer or to preserve anonymity, but the investor is the beneficial owner.
   
Best efforts underwriting   In this type of underwriting, the investment firm acts as an agent. The firm agrees to use its "best efforts" to sell the new issue of securities, but does not guarantee the issuing company that the securities to be issued will be sold.
   
Beta   A measure of how closely the movement of an individual stock follows the movement of the entire stock market.
   
Bid   The highest buying price available in a given market for the security being quoted.
   
Black-Scholes model   The first widely-used model for stock option pricing. This formula can be used to calculate a theoretical value for an option using current stock prices, expected dividends, the option's strike price, expected interest rates, time to expiration and expected stock volatility. While the Black-Scholes model does not perfectly describe real-world options markets, it is still often used in the valuation and trading of options.
   
Block trades   Any trade for 10,000 shares or more, with a value of at least $100,000.
   
Blue chip stock   An actively traded, nationally recognized common stock with a record of continuous dividend payments and other strong investment qualities.
   
Blue sky   A slang term for laws that various Canadian provinces and American states have enacted to protect the public against securities frauds.
   
Board lot  

A regular trading unit. The board lot size of a stock on the TSE could be 1,000, 500, or 100 shares depending on the price of the stock. An investor buying or selling a board lot usually pays less commission rate than an investor buying or selling an odd lot.

Security Selling Price Board Lot Size
$ 0.005 - 0.095 1,000 shares
$ 0.10 - $0.995 500 shares
$ 1.00 + 100 shares
   
Board of Directors (BOD)   A committee elected by the shareholders of a company, empowered to act on their behalf in the management of company affairs. Directors are normally elected each year at the annual meeting.
   
Bond   A certificate evidencing a collateralised debt on which the issuer promises to pay the holder a specified amount of interest for a specified length of time, and to repay the loan on its maturity.
   
Bond fund   A mutual fund whose portfolio consists primarily of bonds.
   
Book   An electronic record of all pending buy and sell orders for a particular security.
   
Book value   The value of net assets that belong to a company's shareholders, as stated on the balance sheet.
   
Bought-deal underwriting   In this type of underwriting, the brokerage firm acts as the principal. The brokerage firm risks its own capital to purchase all of the securities to be issued. If the price of the securities decrease before the brokerage firm has had a chance to resell the securities to its clients, the firm absorbs the loss.
   
Box spread   A four-sided option spread that involves a long call and a short put at one strike price as well as a short call and a long put at another strike price. Example: buying 1 XYZ May 60 call, and writing 1 XYZ May 65 call; simultaneously buying 1 XYZ May 65 put, and writing 1 May 60 put.
   
Break-even point(s)   The security price(s) at which an option strategy results in neither a profit nor a loss. While a strategy's break-even point(s) is normally stated as of the option's expiration date, a theoretical option pricing model can be used to determine the strategy's break-even point(s) for other dates as well.
   
Broadened Base Earnings   A concept whereby the earnings per share of a company are computed to include a pro rata share of the earnings of all unsolicited subsidiaries and associated companies.
   
Broker   A securities firm or an individual registered with one. The broker does not usually own the securities that he buys and sells, but acts as an agent for the buyer or seller and charges a commission for its services.
   
Bull Market   A market characterized by rising prices over a prolonged period of time.
   
Bull spread (call or put)   This strategy can be used with both call and put options. In both cases, you buy an option with a lower exercise price and sell an option with a higher exercise price; the two options usually have the same expiry date.
   
Bullish   An adjective used to convey that a stock, or the market in general, will rise in price — a positive or optimistic outlook.
   
Butterfly spread   A strategy involving three strike prices that has both limited risk and limited profit potential. A long call butterfly is established by buying one call at the lowest strike price, writing two calls at the middle strike price, and buying one call at the highest strike price. A long put butterfly is established by buying one put at the highest strike price, writing two puts at the middle strike price, and buying one put at the lowest strike price. For example, a long call butterfly might include buying 1 XYZ May 55 call, writing 2 XYZ May 60 calls and buying 1 XYZ May 65 call.
   
Buy-in   If a broker fails to deliver securities sold to another broker on the settlement date, the receiving broker may buy the securities at the current market price of the stock and charge the delivering broker the cost difference of such a purchase.
   
Buying on margin   Partially purchasing an asset with borrowed money.
   
Buy-write   A covered call position in which stock is purchased and an equivalent number of calls are written at the same time. This position may be transacted as a combined order, with both sides (buying stock and writing calls) being executed simultaneously. Example: buying 500 shares XYZ stock, and writing 5 XYZ May 60 calls. (See also Covered call option writing.)
 
Go back to the top of the page