Glossary of market-linked guaranteed investments

Institutional fixed-interest securities

The financial obligation of a government or company to pay a predermined amount on a specific, predetermined date (e.g.: Government of Canada bond).
 

Market Capitalization

A company's market capitalization is the amount that would have to be paid in order to hold all of its stock. A company's market value is calculated by multiplying the total number of shares in circulation by the current share value. For example, if a company has two million shares in circulation and the share price is $20, the company's capitalization is $40 million.
 

Maximum Growth

This is the maximum return that will be paid to the investor when his deposit reaches maturity. For example, if the index to which his deposit is linked increases by 60% in five years (the equivalent of a compound annual rate of 9.86%) and the maximum growth is 50% (compound annual rate of 8.45%), the return will be 50% (compound annual rate of 8.45%).
 

Participation Rate

The index participation rate is the percentage of market index growth that is earned by the holder of a term deposit. For example, if the index increases by 60% (compound annual rate of 9.86%) in five years and the participation rate is 75%, the return will be 45% (compound annual rate of 7.71%).
 

Pre-issue Interest Rate

The annual interest rate calculated on the deposit between the acquisition date and the issue date.