CSC Chapter 2

Question 1

Identify the role of capital investment in the economy

Answer 1

Creating growth

Question 2

Non-financial domestic corporations are sources of capital. Identify what role these corporations play in the capital markets

Answer 2

Not Significant providers of permanent funds.

Question 3

Identify the typical role of foreign investors in Canadian Capital markets

Answer 3

Direct investment in Canadian Industries

Question 4

The federal government finances expendatures using

Answer 4

T-bills and marketable bonds

Question 5

Business may issue

Answer 5

preferred and common shares

Question 6

individuals may use capital for

Answer 6

mortgage

Question 7

municipal governments may issue

Answer 7

instalment debentures

Question 8

Auction market or Dealer market: Bond and debenture markets

Answer 8

Dealer

Question 9

Auction market or dealer market: TSX, ME, TSX Venture

Answer 9

Auction

Question 10

Auction market or dealer market: Canadian Unlisted Board

Answer 10

Dealer

Question 11

Auction Market or Dealer Market: Transactions between principals (market makers)

Answer 11

Dealer

Question 12

Auction Market or Dealer Market: Major stock markets in Canada

Answer 12

Auction

Question 13

Auction Market or Dealer Market: Network of dealers trading with each other over telephones or computers

Answer 13

Dealer

Question 14

Auction Market or Dealer Market: less regulation for companies traded on this market

Answer 14

Dealer

Question 15

Auction Market or Dealer Market: Higher dollar volume of trading

Answer 15

Dealer

Question 16

Auction Market or Dealer Market: No listing requirements for companies trading on this marker

Answer 16

Dealer

Question 17

Auction Market or Dealer Market: Transactions are between brokers acting as agents for buyers and sellers

Answer 17

Auction

Question 18

Auction Market or Dealer Market: Listing requirements to trade on this market

Answer 18

Auction

Question 19

Identify a characteristic of capital

Answer 19

Mobility

Question 20

Identify the transaction that takes place in the secondary market

Answer 20

Resale of previously issued securities

Question 21

Identify a difference between auction and dealer markets

Answer 21

Prices are publicly visible in the auction market but not in the dealer market

Question 22

Nicolae is considering selling his common shares of DEF Corp. Identify the price Nicolae would most likely receive if he were to enter an order to sell his shares

Answer 22

Bid Price

Question 23

What is the exchange in Canada that deals exclusively with financial futures and options

Answer 23

The Montreal Exchange

Question 24

Choose the system that the Ontario Securities Commission requires firms to use to report unlisted trades in Ontario

Answer 24

Canadian Unlisted Board

Question 25

Identify the role that the Canadian Securities Exchange (CSE) plays in the Canadian Market

Answer 25

Market for emerging companies

Question 26

Identify the security that has its value based on an underlying instrument

Answer 26

Derivatives

Question 27

What is the electronic fixed-income trading system that operates a retail and an institutional fixed-income marketplace

Answer 27

CBID/CBID Institutional

Question 28

Gareth asks his investment advisor to purchase $50,000 in a new corporate bonds that are being issued to raise funds to build a new processing facility. What is the term that would refer to this type of capital investment

Answer 28

Indirect investment

Question 29

Identify a characteristic of dealer markets

Answer 29

Primary market for bonds and debentures

Question 30

The current bid price for ABC Inc is $25.75 and the ask price is $25.87, with last trade at $25.77. Calculate the spread.

Answer 30

Bid - ask = spread so $0.12

Question 31

Identify a characteristic of a liquid market

Answer 31

Narrow price spreads in bid/ask prices

Question 32

XYZ is a producer of technologically advanced experimental electronic devices that has recently experienced rapid growth. Projections are that growth will continue but the market is uncertain at present. Determine the exchange XYZ's investment dealer could recommend for listing XYZ's initial public offering.

Answer 32

Canadian Securities Exchange (CSE)

Question 33

Identify the alternative trading system where an investment dealer can locate real time bid and offer quotations from a range of dealers for government of Canada bonds and treasury bills

Answer 33

CanPX