EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM Canadian Securities Course Exam Questions And Answers. Verified and Updated. What does an Investment Dealer do? - answer✔✔Acts as intermediaries between investors and users of capital. When a Investment Dealer is acting as Primary, what are they doing? - answer✔✔Selling securities from their own inventory. M ake money via spread/underwriting. When an investment dealer is acting as agents, what are they doing? - answer✔✔Facilitating a trade between a buyer and seller, without owning the security. They make money via commissions. What are the three types of Inve stment dealers? - answer✔✔Retail firms, Institutional firms, and Integrated firms. Give a brief description of retail firms. - answer✔✔Includes full service investment dealers and self directed brokers. Give a brief description of Institutional firms. - answer✔✔They serve institutional clients and organizations that trade large volumes like pension funds. Give a brief description of Integrated firms. - answer✔✔Offer products and services that participate in both retail and institutional markets. Most firms underwrite debt and equity issues and are active in the secondary markets. What are the roles of front, middle, and back offices of an investment dealer firm? - answer✔✔Front Office: Portfolio management, Trading, Sales, Marketing. Middle Office: Complianc e, Accounting, Audits, Legal Back Office: Trade settlement. What services do investment dealers provide? - answer✔✔They provide advice about new issues, They act as market makers, They buy stocks as principal becoming more competitive in serving their inst itutional clients, They add liquidity to secondary markets which enhances the primary markets. What is a Market Maker - answer✔✔A trader that maintains liquidity in securities markets by taking large positions to enhance liquidity and sooth out price disto rtions. EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM What does the Clearing and Depository Services (CDS) do? - answer✔✔It clears security transactions daily using a process called netting to establish and confirm a credit or debit position. What are the three types of chartered banks? - answer✔✔Sche dule I,II, & III banks Describe Schedule I Banks - answer✔✔Banks such as TD, RBC. They offer loans, savings and deposits from businesses and consumers. They also sell mutual funds and other investment options, and mortgages. Describe Schedule II Banks - answer✔✔Such as Citi Canada, AMEX Canada. Are foreign bank subsidiaries, They do everything schedule I banks do plus commercial loans to business, issue financial paper in money markets, take deposits for businesses and sell mu tual funds and other investments. Describe Schedule III Banks - answer✔✔Such as Deutsche, Comerica. Most are full service foreign bank branches of foreign banks and accept deposits, not usually lending. What type of bank has strict ownership rules? - answe r✔✔Schedule I banks ( a single shareholder cannot own more than 20%). What is a credit union? - answer✔✔They often cater to member -savers from common interest groups and provide deposit taking services, lending, mortgages, insurance, mutual funds, debt and credit cards. What role do insurance companies play in the financial markets? - answer✔✔They offer term deposits and GIC's, segregated funds and other investment products. What is the most important aspect of insurance companies? - answer✔✔Underwriting (t he business of evaluating risk). What other things do insurance companies have to offer? - answer✔✔Life insurance, home, auto, and commercial insurance. What is a trust company? - answer✔✔They act as a trustee in charge of corporate and individual assets s uch as property. stocks, and bonds. What is the purpose of an investment fund? - answer✔✔They are companies or trusts that sell shares or units to the public and invest the proceeds in a diverse securities portfolio. What are the two types of government -related pension funds? - answer✔✔Defined Benefit (provides employees with a pre -determined specified payment amount when they retire) and Defined Contribution plans (Allows employees to contribute to a plan that invests funds over time). EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM What is a Robo -Advis or? - answer✔✔It provides clients with advice with goal based online investment management, creates portfolios using algos based on theory and questions. Usually built with ETF's. What is a direct investment? - answer✔✔An investment into an asset. Such as buying a house, Or the Government investing in a new highway What is an indirect investment? - answer✔✔When you buy representational items such as stock, or depositing into a savings account. What does an investment advisor do? - answer✔✔Helps individuals or entities invest in indirect investments. What are the 3 characteristics of capital? - answer✔✔Mobility, sensitivity, and scarcity. What are some things you should consider when evaluating a country's risk? - answer✔✔The political environment, economic t rends, fiscal and monetary policy, investment opportunities, and the labor force. Who are the supplier of capital? - answer✔✔Individuals, Governments, Non -financial Investors, foreign investors. Who are the users of capital? - answer✔✔Individuals, business es, and governments. What are fixed -income securities (debt securities)? Give an example of one. - answer✔✔When the issuer agrees to repay a loan at maturity date, and make interest payments to investors. Ex Bonds, Tbills What is an equity security? Give a n example of one. - answer✔✔shares that represent ownership in the company that issued them. Ex Stocks, preferred shares. What role does the financial market play in Canada? - answer✔✔It provides a place where buyers and sellers meet to ensure an efficient transfer of capital. There is no physical location, it all takes place online. What are the individual financial markets that make up the capital markets? - answer✔✔Stock markets, bond markets, and money markets. What other ways can the capital market be categorized as? - answer✔✔Primary, secondary, and auction markets. What is the purpose of primary markets? - answer✔✔It is where newly issued securities are sold. What is the purpose of secondary markets? - answer✔✔Where investors trade securities that are already been issued by companies. EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM What is an auction market? - answer✔✔Where investment dealers act as agents execute buy & sell orders on behalf of their clients. What is a Dealer (OTC) market? - answer✔✔It is a negotiated market where market makers post bid-ask quotes. Consists of banks and investment dealers who act as principal. Almost all bonds and debentures are sold here. What are the 5 exchanges in Canada? - answer✔✔TSX, TSX.V, Montreal Exchange, Canadian securities exchange, NEO Exchange. What is an Alternative Trading System (ATS)? - answer✔✔Are electronic marketplaces that provide automated matching and execution of trades in both equity and fixed -income markets. What is CanDeal? - answer✔✔It is a joint venture between Canada's 6 largest bank -owned investment dealers. What is CBID? - answer✔✔It is an ATS that operates 2 types of fixed -income marketplaces, retail and institutional. What is CanPX? - answer✔✔It is a j oint venture between several Canadian investment dealers that provides real time Bid and ask quotes in price and yield terms for Government of Canada Tbills. Who regulates the financial sector in Canada? - answer✔✔The Office of the Superintendent of Financ ial Institutions (OSFI). What is the job of the Canadian Securities Administration (CSA)? - answer✔✔It is an umbrella organization of Canada's securities regulators designed to harmonize regulation of the Canadian capital markets. What is a Self Regulatory Organization(SRO)? - answer✔✔SRO's are private industry organizations that provincial regulatory bodies have granted the privilege of regulating their own members. They have their own rules and requirements. Who monitors SRO's? - answer✔✔The Canadian Secu rities Administration (CSA). Name two SRO's - answer✔✔The Investment Industry Regulatory Organization of Canada (IIROC), and the Mutual Fund Dealers Association (MFDA). What does IIROC do? - answer✔✔It oversees all the investment dealers and trading activi ty on debt and equity markets in Canada. What functions does IIROC perform? - answer✔✔Financial and business conduct compliance, Registration, enforcement, and market surveillance. What is the MFDA? - answer✔✔It is the SRO for regulating the distribution a nd sales of mutual funds by its members in Canada.
