The Finance Dictionary

This information provides users with thorough and reliable meanings to all the most common, and even uncommon, financial terms

Financial Terms Beginning With The Letter H

Hedge fund

A loosely regulated pool of capital which tries to increase returns by using options, futures, leverage, short-selling, restructuring companies, and other means. These are volatile investments, and the average investor should not invest a large percentage of their assets in these funds.

Hedging

The use of derivatives to lessen risk.

Holding company

A holding company is a private or public corporation which holds some or all of the shares in one or more private or public corporations. The main benefit of a holding company is in the tax treatment of dividends received from the other corporations owned.

Dividends received by a Canadian corporation from another taxable Canadian corporation are not included in taxable income. When a Canadian controlled private corporation (CCPC) receives dividends from another taxable Canadian corporation with which it is not connected, it pays a special tax, called Part IV tax, at the rate of 33 1/3%. The Part IV tax, and a portion of any Part I tax (regular income tax) paid on investment income, are recoverable via a dividend refund when taxable dividends are paid to shareholders.