A Canadian not-for-profit organization set up by the investment industry designed to protect investors from the bankruptcy of an individual investment firm.Accounts are covered for up to $1 million in shortfall of securities, commodity and futures contracts, segregated insurance funds and cash. Shortfall is the difference between the market value of the account and what the insolvent company can return to the customer. |||While investment firms rarely become insolvent, the CIPF exists to protect the investment accounts of customers.The size of the fund's resources is close to $300 million.
A crown corporation owned by the Canadian government that insures bank deposits up to C$100,000 per personal account held in member Canadian banks in they event that the financial institution fails. The corporation was formed under the Financial Administration Act and Canada Deposit Insurance Corporation Act in 1967. The CDIC is similar to the Federal Deposit Insurance Corporation in the United States. |||Between 1967 and 2008, Canada experience the failure of 43 financial instutions, all of which were CDIC member banks. When using a bank in either in the United States or Canada, FDIC or CDIC membership is important to consider, as it provides depositors with some insurance against losing their savings.
A line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio. |||The CML is derived by drawing a tangent line from the intercept point on the efficient frontier to the point where the expected return equals the risk-free rate of return. The CML is considered to be superior to the efficient frontier since it takes into account the inclusion of a risk-free asset in the portfolio. The capital asset pricing model (CAPM) demonstrates that the market portfolio is essentially the efficient frontier. This is achieved visually through the security market line (SML).
An assessment of the extent to which a stock fund or other similar investment fund's assets have appreciated or depreciated, which may have tax implications for investors. Positive exposure would mean that the assets in the fund have appreciated and that shareholders will have to pay taxes on any realized gains on the appreciated assets. Negative exposure denotes that the fund has a loss carryforward that can cushion some of the capital gains.Calculated as: |||For example, a stock fund with a million shares currently has assets that are worth a total of $100 million. Six months ago, the assets were only worth $50 million and the fund still has $10 million worth of losses that can be carried forward. In this case, the capital gains exposure is 40% or, in other words, if the fund manager realizes the gains, each investor will have to pay taxes on a $40 capital gain.
Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building a brand new factory. |||The amount of capital expenditures a company is likely to have depends on the industry it occupies. Some of the most capital intensive industries include oil, telecom and utilities.In terms of accounting, an expense is considered to be a capital expenditure when the asset is a newly purchased capital asset or an investment that improves the useful life of an existing capital asset. If an expense is a capital expenditure, it needs to be capitalized; this requires the company to spread the cost of the expenditure over the useful life of the asset. If, however, the expense is one that maintains the asset at its current condition, the cost is deducted fully in the year of the expense.
A unique account where untaxed gains are deposited within a private company. |||These untaxed gains are usually distributed to shareholders or owners without additional tax liability.
A rate of depreciation used for income tax purposes only. This term primarily relates to Canadian taxation. |||The CCA rate that can be claimed depends on the asset itself, for example computer software has a much higher CCA rate than buildings or furniture.
When a creditor forgives a debt without requiring consideration in return. The amount of debt that is forgiven by cancellation of debt is considered income to the debtor and must be reported as a result. In most cases, it is taxable as ordinary income and is known as cancellation-of-debt (COD) income. In some cases, this debt is from one country to another and is partially or fully wiped away to help rebuild the nation. |||If the cancellation of debt is taxable, the debtor will receive a 1099-C at year-end that reports the amount of debt forgiven as taxable income. For example, if a bank lent $10,000 to you and you pay back $6,000, then are unable to pay the remainder, the bank can forgive the $4,000 difference, which will be recorded as income for you. Cases in which debt forgiveness is not considered income include bankruptcies, insolvencies, certain farm loans and non-recourse loans.