CSC Chapter 1

Question 1

Acts as an intermediary by matching Investors with users of capital

Answer 1

Investment Dealer

Question 2

Sets and enforces rules that govern market activity and monitors the market to ensure fairness and transparentcy

Answer 2

Self-regulatory Organization (SRO)

Question 3

Oversees the market and the canadian investment regulatory organization

Answer 3

Provincial Regulators

Question 4

The place where suppliers and users of capital trade financial instruments

Answer 4

Financial Market

Question 5

The irrevocable moment where cash and securities are exchanged

Answer 5

Settlement

Question 6

the process of confirming and matching security trade details

Answer 6

clearing

Question 7

Identify the correct statement when the investment dealer is acting as an agent

Answer 7

Does not own the securities that are being bought or sold

Question 8

Identify the function a securities firm performs when underwriting new issues

Answer 8

Principal

Question 9

Identify the market a dealer uses to purchase existing securities for its inventory

Answer 9

Secondary

Question 10

Identify the type of process used to settle trades between member brokers, trading on the TSX

Answer 10

Trades are netted out through a central clearing system

Question 10

Identify the types of firms that serve both retail and institutional clients with a complete offering of products and services

Answer 10

Integrated

Question 11

Identify the types of activities a Schedule II bank engages in

Answer 11

The same types of business as Schedule I banks

Question 12

Identify an activity of a trust company

Answer 12

Can act as trustees in charge of individual assets

Question 13

Identify the most important activity of the insurance business

Answer 13

Underwriting

Question 14

Identify the activity of a sales finance company

Answer 14

Purchase instalment sales contracts from retailers

Question 15

What is an institutional firm

Answer 15

an investment dealer that serves organizations that trade large volumes of securities. Clients typically include mutual funds, pension funds, and insurance companies

Question 16

what is the focus of retail firms

Answer 16

offer a variety of products and services to retail investors (people). they also provide various levels of advice, depending on the clients circumstances

Question 17

What is a self directed broker

Answer 17

execute trades for clients at reduced rates, but they do not provide investment advice

Question 18

What is the primary market

Answer 18

When issues are brought to the market for the first time they are sold on the primary market

Question 19

What is the secondary market

Answer 19

like the stock exchange, where investors trade previously issued shares

Question 20

What is an Agent

Answer 20

someone who facilitates trades but does not own title to the securities at any time during the transaction

Question 21

What functions do the middle office and back offices handle

Answer 21

middle office handles compliance, accounting, and auditing.

Back office handles trade settlement

Question 22

identify a characteristic of a large Schedule I bank voting shares

Answer 22

Single shareholder or group of shareholders may own up to 20%

Question 23

Identify the action of a dealer as principal in an underwriting.

Answer 23

Purchase the issue anticipating to resell at a profit

Question 24

select the term that is used to refer to the controls that inhibit information sharing between various businesses and business units

Answer 24

Firewall

Question 25

Identify the type of investment fund that continually issues shares to investors and redeems these shares on demand

Answer 25

Mutual Fund

Question 26

Identify the federally regulated foreign bank subsidiaries that have been authorized under the bank act to do banking business in Canada

Answer 26

Schedule II banks

Question 27

Indicate the role that an investment dealer is taking when the firm does not assume ownership of securities at some stage in the buying and selling transaction with investors

Answer 27

Agent

Question 28

Identify the term used to refer to the difference between what banks pay as interest on deposits and what they charge as interest on loans

Answer 28

Spread

Question 29

Kai, a very successful and knowledgeable investor, has inherited $200,000 and wants to create a diversified portfolio while minimizing costs. What is the type of investment firm that is best suited for these clients

Answer 29

Self-directed broker

Question 30

A large furniture store wants to sell its consumer instalment contracts to generate cash. Determine the financial intermediary the store should contact

Answer 30

Sales finance company

Question 31

Which department is responsible for the portfolio management activities in a securities firm

Answer 31

Front office

Question 32

Identify the process by which the number of securities and the amount of cash that has to change hands among the various exchange members each day is substantially reduced

Answer 32

Netting

Question 33

Identify the investment service that features portfolios created using algorithms based on modern portfolio theory and online client questionnaires

Answer 33

Robo-advisor

Question 34

Tim's firm develops more efficient online financial planning applications for investors and investment advisors. Identify the type of firm Tim owns

Answer 34

Fintech

Question 35

ABC securities offers a wide range of products and services to both retail and institutional clients, as well as underwriting bon and equity issues. Determine the category of firm ABC belongs to

Answer 35

Integrated

Question 36

XYZ Investments, an investment dealer, regularly takes positions in DEF Inc, a TSX listed equity, with a goal of improving liquidity in DEF while smoothing out unwarranted price fluctuations. Identify the role XYZ likely plays in the stock market

Answer 36

Market maker