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Day Order
A buy or sell order that automatically expires if it is not executed on the day it is entered. All orders are day orders unless otherwise specified.

Dealer Market
A market in which securities are bought and sold over-the-counter in which dealers acts as principals when buying and selling securities for clients. Also referred to as the unlisted market.

Dealer Member
A stock brokerage firm or investment dealer which is a member of a stock exchange or the Investment Industry Regulatory Organization of Canada.

Dealer's Spread
The difference between the bid and ask prices on a security.

Death Benefit
The amount that a segregated fund policy pays to the beneficiary or the estate when the market value of the segregated fund is lower than the guaranteed amount on the death of the annuitant.

Debenture
A Certificate of indebtedness of a government or company backed only by the general credit of the issuer and unsecured by mortgage or lien on any specific asset. In other words, no specific assets have been pledged as collateral.

Debt
Money borrowed from lenders for a variety of purposes. The borrower typically pays interest for the use of the money and is obligated to repay it at a set date.

Debt/Equity Ratio
A ratio that shows whether a company's borrowing is excessive. The higher the ratio, the higher the financial risk.

Debt Ratios
Financial ratios that show how well the company can deal with its debt obligations.

Declining Industry
An industry moving from the maturity stage. It tends to grow at rates slower than the overall economy, or the growth rate actually begins to decline.

Deemed Disposition
Under certain circumstances, taxation rules state that a transfer of property has occurred, even without a purchase or sale, e.g., there is a deemed disposition on death or emigration from Canada.

Default
A bond is in default when the borrower has failed to live up to its obligations under the trust deed with regard to interest, sinking fund payments or has failed to redeem the bonds at maturity.

Default Risk
The risk that a debt security issuer will be unable to pay interest on the prescribed date or the principal at maturity. Default risk applies to debt securities not equities since equity dividend payments are not contractual.

Defensive Stock
A stock of a company with a record of stable earnings and continuous dividend payments and which has demonstrated relative stability in poor economic conditions. For example, utility stock values do not usually change from periods of expansion to periods of recession since most individuals use a constant amount of electricity.

Deferred Annuity
This type of contract, usually sold by life insurance companies, pays a regular stream of income to the beneficiary or annuitant at some agreed-upon start date in the future. The original payment is usually a stream of payments made over time, ending prior to the beginning of the annuity payments. See also Annuity.

Deferred Charges
An asset shown on a balance sheet representing payments made by the company for which the benefit will extend to the company over a period of years. Similar to a prepaid expense except that the benefit period is for a longer period. Deferred charges may include expenses incurred in issuing bonds, organizational expenses or research expenses.

Deferred Preferred Shares
A type of preferred share that pays no dividend until a future maturity date.

Deferred Profit Sharing Plan (DPSP)
A trust arrangement whereby an employer distributes a certain percentage of company profits to his/her employees. It must be an arms length transaction, and employees are not eligible to make a contribution.

Deferred Revenue
The revenue recorded when a company receives payment for goods or services that it has not yet provided. For example, a prepaid subscription to a magazine.

Deferred Sales Charge
The fee charged by a mutual fund or insurance company for redeeming units. It is otherwise known as a redemption fee or back-end load. These fees decline over time and are eventually reduced to zero if the fund is held long enough.

Defined Benefit Plan
A type of registered pension plan in which the annual payout is based on a formula. The plan pays a specific dollar amount at retirement using a predetermined formula.

Defined Contribution Plan
A type of registered pension plan where the amount contributed is known but the dollar amount of the pension to be received is unknown. Also known as a money purchase plan.

Delayed Floater
A type of variable rate preferred share that entitles the holder to a fixed dividend for a predetermined period of time after which the dividend becomes variable. Also known as a fixed-reset or fixed floater.

Delayed Opening
Postponement in the opening of trading of a security the result of a heavy influx of buy and/or sell orders.

Delist
Removal of a security's listing on a stock exchange.

Delivery
Delayed Delivery – A transaction in which there is a clear understanding that delivery of the securities involved will be delayed beyond the normal settlement period. Good Delivery – When a security that has been sold is in proper form to transfer title by delivery to the buyer. Regular Delivery – Unless otherwise stipulated, sellers of stock must deliver it on or before the third business day after the sale. For orders executed September 5th, 2017 onwards, the settlement period will change from three to two business days.

Demand Pull Inflation
A type of inflation that develops when continued consumer demand pushes prices higher.

Demutualization
The process by which insurance companies, owned by policy holders, reorganize into companies owned by shareholders. Policy holders become shareholders in an insurance company.

Depletion
Refers to consumption of natural resources that are part of a company's assets. Producing oil, mining and gas companies deal in products that cannot be replenished and as such are known as wasting assets. The recording of depletion is a bookkeeping entry similar to depreciation and does not involve the expenditure of cash.

Deposit-Based Guarantee
A maturity guarantee consisting of separate guarantees and guarantee dates for each of the deposits made in a segregated fund policy over time.

Depreciation
Systematic charges against earnings to write off the cost of an asset over its estimated useful life because of wear and tear through use, action of the elements, or obsolescence. It is a bookkeeping entry and does not involve the expenditure of cash.

Derivative
A type of financial instrument whose value is based on the performance of an underlying financial asset, commodity, or other investment. Derivatives are available on interest rates, currency, stock indexes. For example, a call option on IBM is a derivative because the value of the call varies in relation to the performance of IBM stock. See also Options.

Direct Bonds
This term is used to describe bonds issued by governments that are firsthand obligations of the government itself. See also Guaranteed Bonds.

Directional Hedge Funds
A type of hedge fund that places a bet on the anticipated movements in the market prices of equities, fixed-income securities, foreign currencies and commodities.

Director
Person elected by voting common shareholders at the annual meeting to direct company policies.

Directors' Circular
Information sent to shareholders by the directors of a company that are the target of a takeover bid. A recommendation to accept or reject the bid, and reasons for this recommendation, must be included.

Disclosure
One of the principles of securities regulation in Canada. This principle entails full, true and plain disclosure of all material facts necessary to make reasoned investment decisions.

Discount
The amount by which a preferred stock or bond sells below its par value.

Discount Brokers
Brokerage house that buys and sells securities for clients at a greater commission discount than full-service firms.

Discount Rate
In computing the value of a bond, the discount rate is the interest rate used in calculating the present value of future cash flows.

Discouraged Workers
Individuals that are available and willing to work but cannot find jobs and have not made specific efforts to find a job within the previous month.

Discretionary Account
A securities account where the client has given specific written authorization to a partner, director or qualified portfolio manager to select securities and execute trades for him. See also Managed Account and Wrap Account.

Disinflation
A decline in the rate at which prices rise – i.e., a decrease in the rate of inflation. Prices are still rising, but at a slower rate.

Disposable Income
Personal income minus income taxes and any other transfers to government.

Diversification
Spreading investment risk by buying different types of securities in different companies in different kinds of businesses and/or locations.

Dividend
An amount distributed out of a company's profits to its shareholders in proportion to the number of shares they hold. Over the years a preferred dividend will remain at a fixed annual amount. The amount of common dividends may fluctuate with the company's profits. A company is under no legal obligation to pay preferred or common dividends.

Dividend Discount Model
The relationship between a stock's current price and the present value of all future dividend payments. It is used to determine the price at which a stock should be selling based on projected future dividend payments.

Dividend Payout Ratio
A ratio that measures the amount or percentage of the company's net earnings that are paid out to shareholders in the form of dividends.

Dividend Reinvestment Plan
The automatic reinvestment of shareholder dividends in more shares of the company's stock.

Dividend Tax Credit
A procedure to encourage Canadians to invest in preferred and common shares of taxable, dividend-paying Canadian corporations. The taxpayer pays tax based on grossing up (i.e., adding 4 5% to the amount of dividends actually received) and obtains a credit against federal and provincial tax based on the grossed up amount in the amount of 19%.

Dividend Yield
A value ratio that shows the annual dividend rate expressed as a percentage of the current market price of a stock. Dividend yield represents the investor's percentage return on investment at its prevailing market price.

Dollar Cost Averaging
Investing a fixed amount of dollars in a specific security at regular set intervals over a period of time, thereby reducing the average cost paid per unit.

Domestic Bonds
Bonds issued in the currency and country of the issuer. For example, a Canadian dollar-denominated bond, issued by a Canadian company, in the Canadian market would be considered a domestic bond.

Dow Jones Industrial Average (DJIA)
A price-weighted average that uses 30 actively traded blue chip companies as a measure of the direction of the New York Stock Exchange.

Drawdown
A cash management open-market operation pursued by the Bank of Canada to influence interest rates. A drawdown refers to the transfer of deposits to the Bank of Canada from the direct clearers, effectively draining the supply of available cash balances. See also Redeposit.

Due Diligence Report
When negotiations for a new issue of securities begin between a dealer and corporate issuer, the dealer normally prepares a due diligence report examining the financial structure of the company.

Duration
A measure of bond price volatility. The approximate percentage change in the price or value of a bond or bond portfolio for a 1% point change in interest rates. The higher the duration of a bond the greater its risk.

Dynamic Asset Allocation
An asset allocation strategy that refers to the systematic rebalancing, either by time period or weight, of the securities in the portfolio, so that they match the long-term benchmark asset mix among the various asset classes.