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 M

Management expense ratio (MER)

The MER is the percentage of the value of the assets of an investment company (eg mutual fund, closed-end fund, unit investment trusts), that is deducted by the fund manager to cover the costs of managing the fund. This is not part of the front end or back end fees paid to purchase the mutual fund, and is not a cost that is seen by the investor. However, it reduces the return to the investor. The MER is usually in the range of 1.5% to 3% per year.

A much lower MER is charged by Exchange Traded Funds, or ETFs. The MER rate can make a huge difference in investment returns over a period of 20 years.


If you have securities at a brokerage in a margin account, the brokerage will allow you to borrow a percentage of the value of your holdings. A higher percentage is allowed for large cap stocks, and you cannot borrow anything against some small cap stocks.

Margin call

If you have bought stocks on margin, and the amount you have borrowed exceeds the margin limit that the brokerage has allowed you, you will receive a call from the broker asking you to either sell some stocks or transfer money into your account.

Marginal tax rate

A person's marginal tax rate is the tax rate that will be applied to the next dollar he/she earns.

The marginal tax rates on capital gains and Canadian dividend income are lower than on other types of income, because:

  • only 50% of capital gains are included in taxable income
  • either 125% or 145% of Canadian dividends are included in taxable income, but a dividend tax credit is deducted from taxes payable.

Marked to Market

When an investment is marked to market, it is shown on the balance sheet at market value. This results in changes in the market value being shown on the income statement as a profit or loss.


The bringing together of people for the purpose of trade. This can be done electronically in the form of a stock market, or physically in the form of a farmer's market.

Market cap

Market capitalization, or the total market value of the company, is calculated by multiplying the current price per share by the total number of common shares currently outstanding.

Market maker

A "market maker" is a firm that will buy and sell a particular stock on a regular and continuous basis at a publicly quoted price. A stock exchange will appoint brokerages to act as market makers on certain stocks. A trader from the brokerage will buy and sell shares on the open market, maintaining a minimum level of trading activity, and trying to reduce the price volatility in their assigned stocks. On some exchanges, the market makers can buy shares from issuers.

Market order

An order placed to buy or sell a security immediately at the best current price possible.

See also limit order.

Market value per share

This is the current price of a security, as determined by the investors who buy or sell the security on a stock exchange. See also bid/ask.


The maturity date of a financial instrument such as a t-bill, GIC, loan, bond or debenture is the date at which it becomes due.


See management expense ratio.


See age of majority / minor.

Momentum investor

A momentum investor will buy stocks in a sector which appears to be rising.

See also growth investor and value investor.

Money market

Money market investments are short term financial investments such as t-bills, bankers acceptances, commercial paper, and GICs.

Money supply

The money supply consists of bank notes and coins in circulation, all deposits at financial institutions, all mutual funds, individual annuities at life insurance companies, and Canada Savings Bonds.


A mortgage is a loan secured by property.

Motor Vehicle

A motor vehicle is defined by the Income Tax Act as "an automotive vehicle designed or adapted to be used on highways and streets but does not include (a) a trolley bus, or (b) a vehicle designed or adapted to be operated exclusively on rails"

A passenger vehicle is always an automobile, and an automobile is always a motor vehicle, but a motor vehicle is not always an automobile or passenger vehicle.

There are special rules for GST registrants for claiming input tax credits on the purchase of passenger vehicles.

For income tax purposes, there are limitations on the expenses that can be claimed for a passenger vehicle.


Most recent quarter. Some ratios reported on investment information websites may be calculated from the company's financial statements for the most recent quarter (3 month period).

Mutual fund

Also known as an open-end fund, this is an investment company which pools the money of many investors, and uses the money to invest in a variety of different securities. The securities may be stocks, bonds, money market securities, or a combination of these. The mutual fund has a fund manager to handle the buying and selling of securities. The fund company does the recordkeeping for individual investors, providing reports which detail cost basis, dividend income, capital gains, etc. For these services, the mutual fund company charges a management fee, which is usually expressed as a percentage of the asset value of the fund. This is called the management expense ratio (MER). This fee is taken from the fund by the fund manager to cover the costs of managing the fund. Many mutual funds also charge fees when the funds are purchased (front end fees or loads) or sold (back end fees or loads). The ones which do not charge these fees are called no-load funds.

See also closed-end funds, exchange-traded funds and net asset value.