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Definition of Federal funds
Non-interest bearing deposits held in reserve for depository institutions at their district federal
The market where banks can borrow or lend reserves, allowing banks temporarily
This is the interest rate that banks with excess reserves at a federal Reserve district bank
The interest rate at which banks lend deposits at the federal Reserve to one another overnight.
The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means
The beta of a fund is determined as follows:
Interest rate associated with borrowing money.
Indicated yield represents return on a share of a mutual fund held over the past 12
Investment funds established for the support of institutions such as colleges, private
Securities issued by corporations and agencies created by the U.S. government,
Agencies of the federal government set up to supply credit to various classes of
A federal institution that insures bank deposits.
A federal institution that lends to a wide array of federal credit agencies funds it
The institutions that regulate and lend to savings and loan associations. The
The central bank of the U.S., established in 1913, and governed by the federal
Arms of the federal government that are exempt from SEC registration and
Forward Fed funds
Fed funds traded for future delivery.
Freddie Mac (Federal Home Loan Mortgage Corporation)
A Congressionally chartered corporation that
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
Cash flow available after payment of taxes in the project.
Term Fed Funds
Fed funds sold for a period of time longer than overnight.
Mutual funds that do not charge an upfront or back-end commission, but instead take out up to
The capital invested in a business by the shareholders, including retained profits.
Federal Reserve (the Fed)
The central bank in the United States, responsible for setting interest rates.
internally generated funds
Cash reinvested in the firm; depreciation plus earnings not paid out as dividends.
Federal Open Market Committee (FOMC)
Fed committee that makes decisions about open-market operations.
Federal Reserve Banks
The twelve district banks in the federal Reserve System.
Federal Reserve Board
Board of Governors of the federal Reserve System.
Federal Reserve System
The central banking authority responsible for monetary policy in the United States.
Electronic Federal Tax Payment Systems (EFTPS)
An electronic funds transfer system used by businesses to remit taxes to the government.
Federal Employer Identification Number
A unique identification number issued
Federal Insurance Contributions Act of 1935 (FICA)
A federal Act authorizing the government to collect Social Security and Medicare payroll taxes.
Federal Unemployment Tax Act (FUTA)
A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
Labour-Sponsored Venture Funds
Venture capital corporations established by labour unions. They function as other venture capital corporations but are subject to government regulation.
EFT (electronic funds transfer)
funds which are electronically credited to your account (e.g. direct deposit), or electronically debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly loan or mortgage payment). A wire transfer is a form of EFT.
Mutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities.
Mutual funds that seek regular income. This type of fund invests primarily in government, corporate and other types of bonds, debt securities, and other income producing securities and in certain circumstances can also hold common and preferred shares.
Mutual funds that aim to track the performance of a specific stock or bond index. This process is also referred to as indexing and passive management.
NSF (non-sufficient funds)
This appears on your statement if there are insufficient funds in your account to cover a cheque that you have written or a pre-authorized payment that you have already arranged. You will be charged a service fee for non-sufficient funds.
Mutual funds that seek to preserve capital. This type of fund invests primarily in short-term securities with an average term to maturity of one year or less, or in the case of money market funds, 90 days or less.
The interest rate that the federal Reserve charges a bank to borrow funds when a bank is
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
The municipal bond market where state and local governments raise funds. Bonds issued
Back To Back Annuity
This term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application.
Creditor Proof Protection
The creditor proof status of such things as life insurance, non-registered life insurance investments, life insurance RRSPs and life insurance RRIFs make these attractive products for high net worth individuals, professionals and business owners who may have creditor concerns. Under most circumstances the creditor proof rules of the different provincial insurance acts take priority over the federal bankruptcy rules.
Registered Pension Plan
Commonly referred to as an RPP this is a tax sheltered employee group plan approved by federal and Provincial governments allowing employees to have deductions made directly from their wages by their employer with a resulting reduction of income taxes at source. These plans are easy to implement but difficult to dissolve should the group have a change of heart. Employer contributions are usually a percentage of the employee's salary, typically from 3% to 5%, with a maximum of the lessor of 20% or $3,500 per annum. The employee has the same right of contribution. Vesting is generally set at 2 years, which means that the employee has right of ownership of both his/her and his/her employers contributions to the plan after 2 years. It also means that all contributions are locked in after 2 years and cannot be cashed in for use by the employee in a low income year. Should the employee change jobs, these funds can only be transferred to the RPP of a new employer or the funds can be transferred to an individual RRSP (or any number of RRSPs) but in either scenario, the funds are locked in and cannot be accessed until at least age 60. The only choices available to access locked in RPP funds after age 60 are the conversion to a Life Income Fund or a Unisex Annuity.
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