Glossary

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Market capitalisation: A company's market value, as measured by the number of shares outstanding, multiplied by their stock market price.

Market efficiency: This term refers to the extent to which a given market is liquid and transparent.

Market-maker: A professional trader who provides permanent bid and offer quotes on a given security.

Market price: Stock market value or price of a security at a given point in time (as opposed to the constant par value). The market price of a security varies according to the buyer's bid price and the seller's offer price.

Market timing: The optimal moment, with respect to the market's situation, to make a trade.

Micro cap: A company with a very low market capitalisation (relative to the exchange on which it is listed).

Mid cap: A company with a medium-sized market capitalisation (relative to the exchange on which it is listed).

Mispricing: Incorrect valuation of a company or its shares.

Money-market instruments: Actively traded short-term debt instruments on the secondary market: these include Treasury bills, negotiable Certificates of Deposit (CDs) for large amounts, repurchase agreements and Federal Funds.

Multiple: Term used in the context of floor funds. It refers to the preferred level of exposure to the risky asset in question, a level of exposure which will depend on maximum permitted risk as defined by the floor fund's cushion.

NASDAQ: National Association of Securities Dealers Automated Quotation System: US exchange specialised in second-line stocks.

NAV: See net asset value.

Net asset value (NAV): A fund's assets calculated at market value, less its debt.

Net asset value (NAV) per share: An investment fund's net asset value, divided by the number of units in circulation. NAV serves as the basis for calculating the issue/redemption price.

Net yield: Yield on a security once withholding tax has been deducted.

Offshore fund: A fund domiciled in a jurisdiction that offers economic and tax advantages.

OPCVM: Organisme de placement collectif en valeurs mobilières : French term for investment fund.

Open-ended fund: A fund authorised to issue additional units at any time.

Opening frequency: Frequency with which the units of an open-ended fund may be traded.

Options: Contract between two parties which accords the right to, but does not obligate, one party to buy (call option) or sell (put option) a given quantity of a physical or financial product at any time over a given period at a price set in advance.

Overexposure: Risk caused by too large a proportion of assets being allocated to a given asset class.