730 Index convertible bonds, 26 corporate bonds, 25 26 coupon bond, 62, 66 68, 66n, 67t, 75n, 124n, 126n credit-rating agencies, 115 116 current yield, 68 default-free bonds, 114 default risk, 114 116, 115f defined, 3, 3n discount bond, 62, 68 70, 75n, 124n, 126n Eurobond, 27 28 and expected returns, 90 91 as external financing source, 168 fallen angels, 116 government agency securities, 27 Government of Canada bonds, 26 indexed bonds, 79 interest-rate risk, 74 75, 75n international bond market, 27 28 investment-grade securities, 115 116 junk bonds, 116, 261, 267 liquidity, 117 118 and liquidity, 91 long-term bonds, 74, 114f maturity of bond returns, 74 municipal government bonds, 26 perpetuity, 67 68, 69 prices See bond prices provincial bonds, 26 rate of capital gain, 72 73 rate of return, 71 72 Real Return Bonds, 79 redemption, 26 registered bonds, 26 and risk, 91 risk premium, 114 shorter-term bonds, 74 speculative-grade bonds, 116 tax-exempt, 118 taxable, 118 volatility of bond returns, 74 and wealth, 90 yield to maturity, 63 71 zero-coupon bond, 62, 75n Bordo, Michael D., 391n borrowed reserves, 407, 420 borrowing costs, 235 borrowings, 316 Bosnia, currency board in, 544 Bouey, Gerald, 383, 464, 688 branches, 254, 255 Brazil financial crises in, 218n fiscal imbalances in, 199 foreign exchange crisis, 533 534 foreign lending to, 279, 280 Bretton Woods system, 485, 525 526, 529 British North America Act, 255 British-style universal banking system, 274 brokerage fees, 561n brokerage firms, 301 brokers, 20, 300 Brown, Gordon, 397 Brown, Henry, 264 Bryant, Ralph, 654n bubble asset-price bubble, 202, 481 485 credit-driven bubbles, 482 483 defined, 159 explanations for, 160 high-tech bubble, housing price bubble, 205, 206 irrational exuberance, 483 rational bubbles, 159 tech-stock bubble, 483 bubble economy, 464 budget deficit and credibility, 708 709 defined, 10 financing a persistent deficit, 677 and inflation, 676 680 and interest rates, 679f and money creation in Canada, 678 680 and money creation in other countries, 678 as percentage of GDP, 10f and supply of bonds, 93 94 budget surplus defined, 10 as percentage of GDP, 10f and supply of bonds, 93 94 Buffett, Warren, 375 building societies, 275 Bulgaria, currency board, 544 Bundesbank, 465, 531 532 Burns, Arthur, 463 Bush, George, 393 business cycles defined, electoral business cycles, 400 expansion of, and interest rate, 95 97, 96f and money, 7, 7f partisan business cycles, 400 past business cycle episodes, explanations for, 633 635 political business cycle, 399 real business cycle theory, 631 633, 650, 651 yield curve as forecasting tool, 132 Business Development Bank of Canada (BDC), 308 business finance companies, 299 300 buy-and-hold strategy, 158 C Caisse Centrale Desjardins du Qu bec, 406n, 432n, 433n Caisse centrale Desjarins, 276 Caisse de d p t et placement du Qu bec, 208, 297 caisses populaires, 5, 35, 35t, 276 277 see also banks call, 26 call option, 362 363, 363f call premium, 362 call reports, 233 Calomiris, Charles, 204n CAMELS rating, 231 Campbell, John Y., 131n Campbell, Nile Stephen, 310n Canada asset-backed commercial paper (ABCP) market, 207, 208 209 bank failures, 202 banking crisis, 203, 237 241 banking system, 212, 253 258, 253f channel/corridor system, 436 Constitution, 255 control attestation, 192 debt deflation, 203 deposit insurance, 242 246 external funds, sources of, 167, 167f financial legislation, 238t foreign banks, 280 281 Generally Accepted Accounting Principles (GAAP), 236 gold standard, 256 inflation, rise in, 1960-1980, 680 683 inflation targeting, 467, 469, 471 lawyers in, 185 monetary targeting, 463 464 Montreal Accord, 209 mortgage insurance market, 210 negative supply shocks, 634 635 past Canadian financial crises, 199 203 perfect storm of adverse shocks, 549 reserve requirements, 407, 436 savings rates, and interest rate, 98 99 subprime financial crisis in U.S., effect of, 206 207 subprime mortgages, 210 Canada bonds, 116, 116f Canada Deposit Insurance Corporation Act, 238t, 385, 385n, 454 Canada Deposit Insurance Corporation (CDIC), 242 246 described, 39 Differential Premiums By-law, 242 243 evaluation of, 244 246 limits on scope of deposit insurance, 244 Modernized Standards By-law, 245 Opting-Out By-Law, 243 other provisions, 245 premium structure and rates, 243t prompt corrective action provisions, 244 245 risk-based insurance premiums, 245 as safety net, 226 Standards of Sound Business and Financial Practices, 246 subject and nature of regulations, 38t Canada Investment and Savings, 384 Canada Life, 289