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Financial Glossary

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Balance sheet (statement of financial position)
Financial statement indicating the financial position of an individual, couple, family, company, etc. on a given date. This statement lists assets and liabilities and shows net worth (difference between assets and liabilities).

Basis point
One-hundredth of a percent. For example, if the mortgage rate posted by your financial institution rose from 4.25% to 4.30%, this would be an increase of 5 basis points.

Individual designated on an insurance contract to receive insurance benefits.

Amount of money the insurer pays the beneficiary of an insurance following a loss.

Highest price a buyer would pay for a security, subject to a quantity limit.

Securities issued by governments and companies and represent a loan granted by the investor to the issuer (state, public corporations, and private companies). In general, the issuer promises to pay a fixed interest rate to the buyer at certain intervals and pay back a predetermined amount at maturity, usually the face value, which is a multiple of $1,000. Bonds can be sold at a price above or below face value. Corporate bonds are generally backed by specific assets. The term is generally from 1 to 30 years.

Book value (investment funds)
Cost of an initial investment + subsequent purchases + reinvested distributions (ex: interest, dividends) minus withdrawals. It is the sum of all transactions in an investor’s account.

Borrowing to invest
Borrowing money in order to invest. This increases the potential gains, as well as the potential losses, on any investment.

Also called margin buying.

Business corporation
Business established under law and that is a separate legal entity from its shareholders. Shareholders are therefore not responsible for the corporation’s debts; their risk is limited to the amount (capital) invested in the corporation. Shareholders control the corporation according to the number of voting shares they hold.

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