CSC Chapter 1-3 Review Flashcards
(30 cards)
Which department in a large, integrated investment firm is responsible for compliance, accounting, audits and legalities?
Middle office.
An investment dealer has made a commitment to maintain the liquidity of a specific security trading in the market. What can the dealer do to meet this commitment?
Hold shares of security in inventory to ensure availability.
What is the ethical barrier, designed to avoid conflicts of interest, that restricts access to non-public information between different areas of a bank?
Firewall.
What role is an investment firm performing when it completes a sell transaction from its own inventory of an exchange-listed security?
Principal.
How is the sales department of an integrated securities firm typically organized?
Retail and institutional divisions.
What is the main function of CDS Clearing and Depository Services Inc.?
Daily netting of securities transactions.
What part of a securities firm’s business is typically the focus of the front office department?
Portfolio management.
What are Schedule III banks?
Foreign bank branches of foreign institutions doing business in Canada.
What is the role of financial intermediaries in the marketplace?
Facilitating transfer of capital from savers to users.
What is underwriting?
Purchasing a new issue of securities on a given date at a specified price.
Which transaction would occur in a dealer market?
Investor sells $25,000 of Government of Canada bonds.
Azadeh is interested in buying 1,000 shares of ABC Ltd. The company first issued shares 2 years ago that have nearly doubled in value since then. Where can Azadeh buy the shares?
On the secondary market.
When are foreign companies interested in borrowing funds from Canada?
Canadian capital is less expensive than foreign capital.
In what market can investors access initial public offerings (IPOs)?
Primary market.
Minna purchases an investment, secured only by the reputation of the company, that is guaranteed to pay $40 a year in income and return her capital in 10 years. What has Minna purchased?
Debentures.
What is the role of an investment dealer when acting on behalf of a client in an auction market?
Agent.
Three different investors enter orders to buy ABC at $8.06, $8.04 and $8.10, and three other investors enter orders to sell ABC at $8.06, $8.08 and $8.12. At what price will a trade occur?
$8.06.
A market maker buys shares of XYZ, the security that she makes the market for. What increases as a result of this trade?
Market maker’s inventory.
What is the bid-ask spread if the current ask prices for ABC are $13.75 and $13.78 and current bid prices are $13.67 and $13.69?
$0.06.
What transaction is an example of an indirect investment?
Insurance company buys corporate debentures.
Ahmad’s margin account at his investment dealer consists of $45,000 in cash and $1,250,000 in securities. The dealer becomes insolvent and declares bankruptcy. How much coverage under the Canadian Investor Protection Fund (CIPF) is Ahmad entitled to?
$1,000,000.
ABC Funds is a British Columbia Mutual Fund Dealer and a CIRO member firm. If ABC Funds becomes insolvent, what is the maximum protection available to clients per eligible account?
$1,000,000.
Claire has a $150,000 term deposit with XYZ Trust and a $75,000 term deposit with ABC Trust, both of which are member institutions of the Canada Deposit Insurance Corporation (CDIC). What would be the maximum coverage available to Claire if both became insolvent?
$175,000.
What organization is responsible for regulating and supervising banks, insurance, trust and loan companies at the federal level?
The Office of the Superintendent of Financial Institutions.
