Chapter 2

Question 1

What is capital?

Answer 1

wealth, both real (land, building, etc) and representational (bonds, stokcs, money)

Question 2

Direct vs indirect investing?

Answer 2

Direct: savings for a home, invest in highway, pay start up costs for business

indirect: stocks, bonds, investing in RESP, depositing savings, generally done with them help of an investment advisor

Question 3

What are the three characteristcs of capital

Answer 3

Mobility, sensitivity to environment and scarcity

Question 4

What is a structured product

Answer 4

Financial engineered product with the characteristics of debt, equity and an invesmtne funds (Principal-protected notes, index linked GIC)

Question 5

What is money market?

Answer 5

Short-term, fixed-income securities with a term of 1 year or less trade.

Question 6

What is auction market?

Answer 6

Securities are bought and sold by investors. investment dealers, who are generally acting as agents for their client execute buy/sell orders. These orders are channeled into a single market where they compete against each other and create a bid-ask spread

Question 7

What is the TSX

Answer 7

They list equities and some debt instruments that are convertible into listed equity, income trusts and exchange-traded funds

Question 8

What is TSX Venture

Answer 8

Lists equities and a few debenture issues (unsecured bonds)

Question 9

What is TSX Alpha Exchange

Answer 9

Offers trading in securities listed on TSX and TSx venture

Question 10

What is montrea exchange/ bourse de montreal

Answer 10

Trades all financial and equity futures and options listed for trading in canada

Question 11

What is ICE NGC Canada

Answer 11

They provide electronic trading, central counterparty clearing and data services in NA natural gas and electricity markets

Question 12

What is the canadian securities exchange

Answer 12

They list equities of emerging companies

Question 13

What is NEO

Answer 13

Listing services and facilitates trading in securities listed in NEo exchange, TSX and TSX venture Exchange

Question 14

What is dealer market?

Answer 14

It is an OTC market, dealers negotiate and market makers post bid-ask quotes via electronic platforms, they generally act as principals. Almost all bonds and debntures are sold through dealer markets

Question 15

What are the properties of unlisted equity market

Answer 15

more speculative, no attempt to regulate, less liquid

Question 16

Explain otc derivates market

Answer 16

24 hrs, dominated by large internation financial intuitions, products tend to be complex

Question 17

Describe Reporting standards for unlisted equity market

Answer 17

In most of canada, you do not need to report trades, however in Ontario, the Ontario Securiteis Act requires that they be reported through the web-based system of Canadian Unlisted Board Inc.

Question 18

Describe Alternative Trading systems

Answer 18

Also called ATS, they provide automatic matching and execution of equity and fixed income trades.

For Equities it was once performed exclusively by stock exchanges but the Canadian Securiteis Administrators allow ATS to complete with recognized exchanges and other ATS. They cannot carry out all functions that traditional exchanges (such as tsx) can. They cannot list securities and can only trade them

For Fixed-Income Electronic Trading System

• With exception of a few debentures listed on TSX and TSX venture exchange, all bond and money market securities are sold through dealer markets. includes CanDeal, CBID, CBID Institutional, MarketAxess and CanPx

Question 19

Describe CanDeal

Answer 19

Member of IIOC, joint venture by Canada’s 6 largest banks, offers institutional investors access to government securities and money market Instruments. recognized as both debt ATS and investment dealer. (operated by TMX Group LTD)

Question 20

Describe CBID and CBID INstitutional

Answer 20

ATS that operated two distinc fixed=income marketplaces: retail and institutional. retail fixed-income marketplace is accessible by registered dealers on behalf of clients and institutional is accessible by registered dealers, institutional investors, governments and pensionfunds

Question 21

Describe marketAxess

Answer 21

Provides market data and trading platform for wide range of coporate bonds and other fixed-income securities with access to multi-dealer compentive pricing. Member of IIROC and operates in Canada and Quebec

Question 22

Describe CanPX

Answer 22

Joint venture between several Canadian invesmtne dealers and inter-dealer brokers. Combines digital feeds from participating dealers to provide real-time bid and offer quotations, in price and yield terms with volume info. Covers Government of Canada bonds and T-bills.