Economics Of Investing


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Stock Ownership and Taxation

There are various tax consequences associated with the ownership of stock.
Dividends
Because of the dividend tax credit, an individual receiving dividends from a Canadian resident corporation is subject to tax at a favourable rate. Dividends are taxed anywhere from 14 % to 17% lower than ordinary income, for an individual in the highest marginal tax bracket, [...]

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January 13th, 2004 | admin | 0 comments | Continued
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Fixed Income Yield

Fixed income prices and yields move in opposite directions. The price paid for a debt instrument is a consideration in ascertaining yield. As the price of a debt instrument rises, its yield falls, even though the coupon rate remains fixed. Conversely, when the price of the instrument falls, its yield rises. This inverse relationship is [...]

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January 13th, 2004 | admin | 0 comments | Continued
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Regulation of Financial Institutions

Canada’s financial services sector includes the following institutions:

Banks,
Investment dealers,
Insurance companies,
Finance companies,
Credit unions and caisses populaires,
Trust and loan companies,
Pension funds,
Mutual funds.

The Bank Act was first passed in 1871 and governs the establishment and operation of banks in Canada. In total there are more than sixty banks in Canada, with most assets [...]

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December 10th, 2003 | admin | 0 comments | Continued
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Fiscal Policy

Fiscal policy is a term used to describe the measures the government takes to manage the nation’s economy. In the main, these measures take the form of two mechanisms for guiding economic growth: government spending and taxation. The intention of fiscal management is to smooth spending and revenues across all parts of the economic cycle.
During [...]

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December 10th, 2003 | admin | 0 comments | Continued
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Monetary Policy

Monetary policy in Canada is set and administered by the central bank, the Bank of Canada. The Bank of Canada was established in 1934 and is responsible for issuing and managing the country’s money supply and the Government of Canada’s finances. This includes acting as financial advisor to the Government, maintenance of accounts, and issuance [...]

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December 10th, 2003 | admin | 0 comments | Continued
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Interest Rates

Interest rates are set by the supply and demand for money and represent the expected rate of inflation and a return for lending money. The difference between the nominal interest rate and the real interest rate is the expected rate of inflation.
Moneylenders will charge a premium to the interest rate to cover the likelihood of [...]

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December 10th, 2003 | admin | 0 comments | Continued
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Business Cycles

The economies of the world, including the economy of Canada, are subject to business cycles based on identifiable fundamentals. As businesses expand, inflationary conditions begin to appear due to increased spending. In periods of economic contraction, increasing costs slow demand and capacity begins to free up. Business cycles vary in their length and intensity. In [...]

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December 10th, 2003 | admin | 0 comments | Continued
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Deflation

Deflation is characterized by a persistent decline in the overall price level of goods and services in an economy. Deflation may affect all goods and services, or it may affect a particular sector of the economy. The reverse of inflation, deflation is represented by falling prices and wages, which are themselves often rooted in the [...]

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December 10th, 2003 | admin | 0 comments | Continued
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Inflation

Inflation is defined as a persistent increase in the general level of prices. Although today’s inflation rate is considered benign compared to levels of inflation seen in the past, the threat of inflation is always a concern for investors. Economists debate the root causes of inflation, but are agreed that inflation occurs when demand for [...]

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December 10th, 2003 | admin | 0 comments | Continued
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Risk and Return

There are more and more investment products hitting the marketplace every day and, if you’re like most investors, you’re probably faced with tough decisions about which ones are best for you. The dizzying array of choices you face might be narrowed by focusing on two basic tenets of investing discipline: tolerance for risk and duration [...]

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October 29th, 2003 | admin | 0 comments | Continued