CSC CANADIAN SECURITIES COURSE
VOLUME 1 UPDATED Questions and
CORRECT Answers
What does an Investment Dealer do? - CORRECT ANSWER✔✔- Acts as intermediaries
between investors and users of capital.
When a Investment Dealer is acting as Primary, what are they doing? - CORRECT
ANSWER✔✔- Selling securities from their own inventory. Make money via
spread/underwriting.
When an investment dealer is acting as agents, what are they doing? - CORRECT
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? - CORRECT ANSWER✔✔- Retail firms,
Institutional firms, and Integrated firms.
Give a brief description of retail firms. - CORRECT ANSWER✔✔- Includes full service
investment dealers and self directed brokers.
Give a brief description of Institutional firms. - CORRECT ANSWER✔✔- They serve
institutional clients and organizations that trade large volumes like pension funds.
Give a brief description of Integrated firms. - CORRECT 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? -
CORRECT ANSWER✔✔- Front Office: Portfolio management, Trading, Sales, Marketing.
Middle Office: Compliance, Accounting, Audits, Legal
Back Office: Trade settlement.
,What services do investment dealers provide? - CORRECT 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 - CORRECT 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? - CORRECT 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? - CORRECT ANSWER✔✔- Schedule I,II, &
III banks
Describe Schedule I Banks - CORRECT 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 - CORRECT 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 - CORRECT 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? - CORRECT ANSWER✔✔- Schedule I banks
( a single shareholder cannot own more than 20%).
What is a credit union? - CORRECT 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? - CORRECT
ANSWER✔✔- They offer term deposits and GIC's, segregated funds and other investment
products.
What is the most important aspect of insurance companies? - CORRECT ANSWER✔✔-
Underwriting (the business of evaluating risk).
What other things do insurance companies have to offer? - CORRECT ANSWER✔✔- Life
insurance, home, auto, and commercial insurance.
What is a trust company? - CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT ANSWER✔✔- An investment into an asset. Such
as buying a house, Or the Government investing in a new highway
What is an indirect investment? - CORRECT ANSWER✔✔- When you buy representational
items such as stock, or depositing into a savings account.
What does an investment advisor do? - CORRECT ANSWER✔✔- Helps individuals or
entities invest in indirect investments.
, What are the 3 characteristics of capital? - CORRECT ANSWER✔✔- Mobility, sensitivity,
and scarcity.
What are some things you should consider when evaluating a country's risk? - CORRECT
ANSWER✔✔- The political environment, economic trends, fiscal and monetary policy,
investment opportunities, and the labor force.
Who are the supplier of capital? - CORRECT ANSWER✔✔- Individuals, Governments,
Non-financial Investors, foreign investors.
Who are the users of capital? - CORRECT ANSWER✔✔- Individuals, businesses, and
governments.
What are fixed-income securities (debt securities)? Give an example of one. - CORRECT
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. - CORRECT ANSWER✔✔- shares that
represent ownership in the company that issued them. Ex Stocks, preferred shares.
What role does the financial market play in Canada? - CORRECT 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? - CORRECT
ANSWER✔✔- Stock markets, bond markets, and money markets.
What other ways can the capital market be categorized as? - CORRECT ANSWER✔✔-
Primary, secondary, and auction markets.
What is the purpose of primary markets? - CORRECT ANSWER✔✔- It is where newly
issued securities are sold.
