Exam (elaborations)
CSC CANADIAN SECURITIES COURSE EXAM
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CSC CANADIAN SECURITIES COURSE EXAM
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CSC CANADIAN SECURITIES COURSE EXAMWhat 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. Make 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 Investment 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: Compliance, 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 institutional 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 distortions.
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 Schedule 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 mutual 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? - ANSWER 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 (the 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 such 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).
What is a Robo-Advisor? - 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 trends, 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, businesses, 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 an 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.
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.
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