Financial Glossary


T

Tariff (Customs Duties). A tariff is a charge or duty levied on the importation of goods into the US. The rates are set by the government and reduced through international trade negotiations or unilaterally to meet the competitive needs of US industry.

Tariff Rate Quota. Tariff rate quotas provide two rates of duty for a product -- a lower within quota rate and a higher over quota rate.

Tax Base. The amount on which a tax rate is applied. In the case of personal or corporate income tax, for example, the tax base is taxable income; if some kinds of income are excluded from the definition of taxable income (such as a portion of capital gains, or certain types of benefits), they are said to be excluded from the tax base. In the case of sales taxes, the tax base is the value of items that are subject to tax; basic groceries, for example, are not part of the tax base. When economists speak of the tax base being broadened, they mean a wider range of goods, services, income, etc. has been made subject to a tax.

Tax Credit. Reduces the amount of basic federal tax a taxpayer pays. Federal tax credits are non-refundable. Current examples are the married credit, charitable donations, medical expenses and tuition.

Tax Deduction. A reduction of total income before the amount of income tax payable is calculated.

Tax Deferred. Investments whose earnings are taxed at a later date. For example, you pay no taxes on the money you put into an IRA until you take the money out. Tax deferral can be good if you anticipate being in a lower tax bracket at the time of withdrawal.

Tax-Exempt Goods and Services. Some types of goods and services are exempt under the tax code. This means that tax is not applied to these sales.

Tax Free. Refers to investments whose earnings are never taxed.

Tax Loss Carry-forward. A tax loss that can be carried forward for a certain number of years to offset future taxable income and perhaps be utilized by another company in the event of a Merger or an acquisition.

Tax Shelter. An investment that, by Government regulation, can be made with untaxed or partly-taxed dollars. The creation of tax losses in order to offset an individual's taxable income from other sources thereby reduces tax liability.

Taxable Income. The amount of your annual income that is used to calculate how much income tax must be paid; your total earnings for the year minus deductions.

Taxable Benefits. Received or enjoyed in the course of employment, must be included as employment income.

Technical Analysis. A method of evaluating future security prices and market directions based on statistical analysis of variables such as trading volume, price changes, etc., to identify patterns.

Tender Offer. An offer to acquire the stock of a company.

Term Deposit. Similar to guaranteed investment certificate. An interest-paying investment under which the investor commits funds for a specified term at a specified rate of interest, usually 30, 60, 90 days and up to one year.

Term Loan. Generally, a bank loan for a specified amount that matures between one and ten years and requires a specified repayment schedule.

Term Sheet. An agreement between a financial intermediary and an issuer or between a venture capital or private equity firm and a company in which it is investing (a portfolio company) that outlines the basic business, financial, and operating terms that will form the basis for an investment. Term sheets can be long or short and generally are subject to the execution of longer documents that fully explain all of the agreements between the parties (i.e., the definitive agreements). Common topics covered in a term sheet are capital structure and the nature, amount, and timing of the investment, antidilution protection, composition of the board of directors, employment agreements, non-competition agreements with the founders, registration rights, and investor exit strategies. Put another way, this is a non-binding agreement setting forth the basic terms and conditions under which an investment will be made. The term sheet is a template that is used to develop more detailed legal documents.

Terms of Exchange. The conditions of trade or buy-out ratio in a Merger or an acquisition.

Third Stage Capital. This is generally referred to as the capital provided to an enterprise that has established commercial production and basic marketing set-up, typically for market expansion, acquisitions, product development, etc.

Ticker Symbol. A combination of letters that identifies a stock-exchange security. Often, it is the truncated or abbreviated name of the company or group issuing the security. For example, "SMI" stands for Sun Media Corporation and "TSE" stands for the Toronto Stock Exchange.

Time the Market. Some people attempt to invest by timing market highs ("sell" points) and market lows ("buy" points). Few do this well, and the track records of market-timing firms has been less than stellar. We suggest you follow more of a "buy-and-hold" philosophy using dollar cost averaging to make regular purchases. Also referred to as the length of time it takes to get a product from idea to marketplace.

Time to Expiry. The number of days or months or years until expiry of an option or other derivative instrument.

Time-Weighted Return (TWR). A measure of the performance (income and price changes) of your investments independent of the amount of money invested. TWR is expressed as a percent gain or loss for easy comparison with other percent changes for the same time period.

Time-weighted return (TWR) annualized. The TWR expressed as an interest rate so that you can easily compare it with other interest rates for the same time period.

Top-Down Investing. An investment approach that involves looking at the "big picture" in the economy and financial world and then breaking those components down into finer details. After looking at the big picture conditions around the world, the different industrial sectors are analyzed in order to select those that are forecasted to outperform the market. From this point, the stocks of specific companies are further analyzed and those that are believed to be successful are chosen as investments.

Total Income. For income tax purposes, the sum of all income that is potentially subject to tax. Net income is total income minus allowable deductions such as pension contributions, union dues and child care expenses. Taxable income is net income minus certain other allowable deductions such as the northern residents' deduction.

Total Net Worth. The total amount your assets (stocks, bonds, bank accounts, home equity, real estate, personal property, business receivables, notes receivable, etc.) minus the total amount of your liabilities (outstanding loans owed, credit card balances, taxes payable, bills payable, etc.)

Trade. A securities transaction.

Tranche. A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". A specified part of a larger transaction. Put another way, part of a single financing which is split into different maturities or principal amounts (or sometimes different currencies). In short, related securities that are offered at the same time, but have different risks, rewards, and/or maturities.

Treasury Bill (T-bill). Short-term government debt. Treasury bills bear no interest, but are sold at a discount. The difference between the discount price and par value is the return to be received by the investor.

Treasury Stock. Stock re-acquired by a corporation to be retired, or resold to the general public, the stock is considered issued, but not outstanding (in the hands of investors). Put another way, Stock that has been issued by a company and then subsequently repurchased by the company (i.e., in a redemption) but that has not been retired and can therefore be reissued (i.e., sold again) by the company.

Trend Analysis. An analysis of an item made over a number of periods in order to ascertain significant patterns of change in that item.

Trust. An instrument placing ownership of property in the name of one person, called a trustee, to be held by the trustee for the use and benefit of some other person.

Trust Receipt. An instrument issued by a trustee acknowledging that it holds an item in trust for the holder of the receipt.

Turnaround. This is the term used when the poor performance of a company or the business experiences a positive reversal.

Two-step Buy-out. An acquisition plan in which the acquiring company attempts to gain control of the target company by offering a very high cash price for a controlling interest. At the same time, the acquiring company announces a second lower price that will be paid, either in cash, stock, or bonds for the remaining stock.