csc volume 1 Questions and Answers
cash basis of accounting
less than 20% of a subsidiary
public float
-part of issued shares that are outstanding and available for trading by the public
-excludes shares owned in large blocks by institutions.
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csc volume 1 Questions and Answers
cash basis of accounting - answer less than 20% of a subsidiary
public float - answer -part of issued shares that are outstanding and available for
trading by the public
-excludes shares owned in large blocks by institutions.
number of shares outstanding to be lower than the number of shares issued - answer
company redeemed shares
advantage for an issuer to use the Short Form Prospectus System - answer shortens
the time period by which a new issue may be offered to the public
over-allotment option - answer dealer initially sells more stock than the original offer
by the issuer to the public
ceiling imposed on the total amount of bids for a government bond offering submitted by
any primary dealer - answer 40%
yield will be awarded to the firms that submitted a non-competitive tender - answer
average of 5 successful bids
allow significant news to be reported and widely disseminated - answer temporary
halt on trading
3 characteristics of capital - answer mobile
sensitive to the environment
scarce
factors that affect capital - answer political
economic
fiscal
monetary
risk
labour force
only source of capital is - answer savings
retail investors - answer individual investors who buy and sell securities for their own
personal accounts, and not for another company or organization
,indirect investment - answer occurs when the saver buys the securities issued by
governments and corporations, who in turn use the funds for direct productive
investment
government makes use of four main instruments - answer treasury bills
marketable bonds
canada savings bonds (CSBs)
canada premium bonds (CPB)
instalment / serial debentures
municipalities use _____ to spread long term projects over several years - answer
instalment / serial debentures
3 components of the financial industry - answer markets
instruments
intermediaries
open-end fund/ mutual fund - answer -fund raises capital by selling shares/units to
investors
-as unit holders, investors receive part of the money made from the fund's investments
Derivatives - answer products based on or derived from an underlying instrument like
a stock or index
Most common derivatives - answer options
forwards
Private Equity - answer financing of firms unwilling or unable to find capital using
public measures
venture capital - answer invest when business produce little of no cash flow,
unproven technology etc. and have little/ no collateral
Several methods by which private investors finance firms - answer LBO
growth capital
turnaround
early stage VC
late stage VC
distressed debt
distressed debt acquisition - answer purchase of debt securities of private or public
companies that are trading below par due to financial troubles at the firm
private equity investors are typically - answer -Public pension plans
-Private pension plans
-Endowments
, -Foundations
-High net worth investors
Role of private equity in a portfolio - answer return enhancement (reward for
accepting much lower liquidity typical of private equity)
portfolio diversification
efficient markets - answer speedy transactions
low transaction costs
high degree of liquidity
effective regulation
Primary Market - answer -New securities are sold by companies and governments to
investors for the first time.
-Companies raise capital by selling stocks or bonds which governments raise capital by
selling bonds
Secondary Market - answer Investors trade securities that have already been issued
by companies and governments
In this market, buyers and sellers trade among each other at a price that is mutually
beneficial to both parties.
In auction markets - answer buyers enter bids and sellers enter offers for a stock
bid - answer Highest price a buyer is willing to pay for the security being quoted
ask - answer lowest price a seller will accept
spread - answer difference between the bid and ask prices
liquid market - answer frequent sales
narrow price spread between bid and ask prices
small fluctuations from sale to sale.
Canada has 5 exchanges - answer Toronto Stock Exchanges (TSX)
TSX Venture Exchange
Montreal Exchange (Bourse de Montréal MX) (owned by TMX group)
Canadian National Stock Exchange (CNSX)
ICE Futures Canada
IIROC - answer Investment Industry Regulatory Organization of Canada
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