The Canadian Investment Marketplace

A couple inherited $200,000. They want to invest the money but do not know what would be a good investment. Recommend a suitable investment approach. a. Direct investment. b. Invest in derivatives. c. Invest in structured products. d. Indirect investment.

d

Which exchange in Canada deals exclusively with financial futures and options? a. The Toronto Stock Exchange b. The TSX Venture Exchange c. The Winnipeg Commodity Exchange d. The Bourse de Montreal

d

Which of the following are privately-owned computerized networks that match orders for securities outside of recognized exchange facilities? a. CanPX b. QTRS c. CanDeal d. ATS

d

Which of the following represents capital? a. Material commodities like land and buildings. b. Intangible commodities like money and stocks. c. Only material commodities. d. Both material and intangible commodities of economic value.

d

Which of the following transactions takes place in the secondary market? a. Issue of federal treasury bills. b. Sale of Canada Savings Bonds. c. Issue of new debt and equity securities. d. Resale of previously issued securities

d

Which of the following are considered self regulatory organizations (SROs) within the Canadian securities industry? i) IIROC ii) Ontario Securities Commission iii) TSX and TSX Venture Exchange iv) OSFI 1. i), ii), and iv) 2. i), ii), and iii) 3. i) only 4. i) and iii) only

3 i) only Some organizations within the securities industry are considered to be self-regulatory organizations (SROs). These organizations include the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association.

On the drive into the city Sharif, an experienced investment advisor, hears that Tim Hortons' is about to open 50 stores in Mexico. He thinks this is encouraging news and decides to buy 1,000 shares as soon as he gets into work. As he unlocks his office door, his phone rings. It is one of his smaller clients and she wants to buy 2,000 shares, having heard the same news report. What action should Sharif take when entering these orders? a. He must enter his client's order for the shares before he enters his own order. b. He must enter the order for her shares at the same time as he enters his order. c. He can enter his order first as she is not an important client that must be dealt with immediately. d. He can't enter an order for himself for shares in a company that one of his clients wants to buy.

A Effecting a trade for the advisor's own account prior to effecting a trade for a client (front running) is an unethical practice. He must enter her order first, no matter how important she is as a client.

Mia feels she has been treated unfairly by her investment advisor and the IA's dealer member. She believes her account is worth $50,000 less than it should be because the advisor offered inappropriate advice. How do you suggest Mia handle the situation? a. Request arbitration. b. Exercise her right of rescission. c. Request reimbursement through the CIPF. d. Appeal to the Federal Securities Commission.

A There are times when clients feel they have been treated unfairly by a dealer that is a member of an SRO. If, after discussing the problem with the dealer member, they still feel mistreated, clients have the option of suing the dealer or requesting arbitration.

What is the difference between debt instruments and equity instruments?

A debt instrument is an agreement whereby the issuer promises to repay a loan on a specified date (also referred to as the maturity date). In the interim, the issuer makes fixed interest payments to the investor. An equity instrument (a stock or share) allows the investor to buy an ownership stake in the company. There are two main types of stock: common shares and preferred shares. Investors with common shares participate in a proportional claim to profits, losses and any declared dividends. These investors also have voting rights at the company's annual meeting. In contrast, owners of preferred shares are entitled to a fixed dividend and have a prior claim on the company's assets, but do not participate in the company's growth and are not allowed to vote.

A client has the following accounts with an investment dealer who becomes insolvent: $0.5 million in a cash account, $0.6 million in a margin account, $0.55 million in RRSP "A", $0.65 million in RRSP "B", $0.75 million in trust for a daughter and $0.45 million in trust for a grandson. What is the total amount of his coverage under CIPF? a. $3.0 million. b. $3.2 million. c. $3.4 million. d. $3.5 million.

B $3.2 million.The client would have coverage for $1.0 million for the general account (which includes the cash and margin accounts), $1.0 million for the total of the RRSP accounts, $0.75 million for the daughter's trust and $0.45 million for the grandson's trust.

What does the Office of the Superintendent of Financial Institutions regulate? a. All financial institutions operating in Canada. b. All federally regulated financial institutions. c. All provincially regulated financial institutions. d. Banks, trust companies and some pension plans.

B OSFI has responsibility for all federally regulated financial institutions.

What is the difference between auction markets and dealer markets, and what is CUB?

Canada's stock exchanges are auction markets. In an auction market, clients' bids and offers for a stock are channelled to a single central market and compete against each other. Brokerage firms usually act as agents for their clients. The prices of all transactions are publicly visible. Dealer markets, also known as over-the-counter (OTC) or unlisted markets, do not necessarily have a central trading location or exchange where trades flow. Market makers post their bid and ask prices, but the prices at which transactions occur are less publicly visible and may differ from the posted prices. Almost all bond trading in Canada takes place in dealer markets. CUB stands for the Canadian Unlisted Board. It is the Internet-based post-trade reporting system used by dealers to report trades in unlisted securities.

What is the chief source of revenue for most investment houses? a. Underwriting income. b. Earnings from fixed income trading. c. Commissions from agency transactions. d. Interest earned from investments.

Commissions from agency transactions are the major source of revenue for most investment houses, accounting for 35% of total revenue on average.

How do corporations rate as sources of capital?

Corporations tend to retain their earnings and issue securities to finance their own operations and growth. Thus, corporations are not an important source of capital—they are seen as users of capital.

Which of the following banks are subject to rules that restrict the control of any individual or group to no more than 20 per cent? a. Schedule II banks only. b. Schedule I banks only. c. Schedule I and Schedule III banks. d. Schedule I, Schedule II banks, and Schedule III banks.

Currently, voting shares of large Schedule I banks must be widely held, subject to rules that restrict the control of any individual or group and non-NAFTA shareholders to no more than 20 percent. In contrast, a single shareholder, including a company, can control a medium sized bank (shareholder equity of less than $5 billion) by owning up to 65% of the voting shares, provided that the remaining shares remain publicly traded. A small bank (shareholder equity of less than $1 billion) can be owned by one individual or organization.

Select the false statement about exemptions from take-over bid legislation. a. The offer is for shares in a private company. b. The acquisition does not aggregate to more than 5% of the securities of a class within a 12-month period and the price paid for any of the securities does not exceed the market price at the date of acquisition. c. In Ontario, the number of holders of securities subject to the bid does not exceed 50 and the securities held in aggregate are less than two per cent of the outstanding securities of that class. d. A private agreement between 10 or fewer security holders at a price not exceeding 115% of the market price of the securities.

D A takeover bid is exempt from takeover bid requirements if the offer is by way of private agreement with five or fewer security holders at a price not exceeding 115% of the market price of the securities.

Demutualization refers to: Selling mutual fund units in the open market. Redeeming a whole life insurance policy. The process whereby policyholders of an insurance company become shareholders in the company. The role played by Schedule II and III banks in securing commercial loans for foreign-based corporations.

Demutualization refers to the process by which insurance companies, owned by policyholders, reorganize into companies owned by shareholders. Basically this means that the policyholders become shareholders in the insurance company.

A very knowledgeable investor who does not need advice about what to invest in inherited $100,000 and wishes to create a diversified portfolio. What type of type of investment firm is best suited for this client investor? a. A mutual fund dealer. b. A full-service retail firm. c. An institutional firm. d. A discount broker.

Discount brokers execute trades for clients at reduced rates but do not provide advice. Discount brokers are more popular with those investors who are willing to research individual companies themselves in exchange for lower commission rates.

An investor does not like large corporations. He feels they are too profit-oriented and not focused enough on the community. However he needs to borrow money to buy a house. What type of financial intermediary would you suggest best meets this investor's criteria and needs? a. One of the chartered banks because of their consumer focus. b. A property and casualty insurance company as their interest rates are lower than other financial intermediaries. c. A credit union as their primary motive is helping members. d. A sales finance company as they specialize in consumer loans.

Early in the 1900s, many individual savers and borrowers felt that chartered banks were too profit oriented. This led to the establishment of many co-operative, member-owned credit unions in English-speaking communities in Canada and the parallel caisses populaires (people's banks) in Québec. Frequently, credit unions seek member-savers from common interest groups such as those in the same neighbourhood, those with similar ethnic backgrounds and those from the same business or social group.

Schedule II banks can: Engage only in deposit and chequing account services Engage in the same types of business as Schedule I banks. Engage in the same types of business as Schedule I banks with the exception of commercial banking. Engage in the same types of business as Schedule I banks with the exception of retail deposit and lending services.

Engage in the same types of business as Schedule I banks with the exception of retail deposit and lending services.

Do non-residents of Canada consider Canada a good place to invest? Answer.

Generally, yes. Non-residents tend to invest in Canadian industries, particularly manufacturing, petroleum and natural gas, and mining and smelting. Controls on some industries, such as the financial industry, could be eased to encourage more foreign investment.

I often read stories about clients suing their advisor and the brokerage firms. Can you briefly explain to me how the investment industry is regulated?"

In Canada, regulation of the securities industry is carried out by provincial securities commissions and self-regulatory organizations, including the Investment Industry Regulatory Organization of Canada (IIROC). Each province has government bodies — securities commissions or administrators — that oversee a provincial securities act. This act is a set of laws and regulations that outlines what participants in the market can do. The securities commissions delegate certain aspects of securities regulation to the Investment Industry Regulatory Organization (IIROC), the Bourse de Montréal, the Toronto Stock Exchange, TSX Venture Exchange, the ICE Futures Canada, and the Mutual Fund Dealers Association (MFDA). The provincial securities commissions and administrators have formed a national group, the Canadian Securities Administrators, to work toward making securities regulations consistent and harmonized across Canada.

What type of transaction is an underwriting? a. Agency - the dealer will do his best to sell the securities to clients. b. Principal - the dealer will hold the issue in inventory and sell at some future time. c. Principal - the dealer will buy the issue anticipating to resell at a profit. d. Agency - the dealer will acquire the issue if there are client orders for the securities.

In an underwriting, the dealer acts as a principal and purchases new securities from an issuer. The dealer intends to resell these securities immediately at a profit.

In which market does a dealer purchase existing securities for its inventory? Primary Initial Secondary Inter-dealer

Investment dealers can act as principals in the secondary markets by maintaining an inventory of already issued and outstanding securities. The dealer buys securities in the open market, holds them in inventory for varying periods, and subsequently sells them.

"A friend of mine told me that if I lose money in a mutual fund I am covered by the mutual fund investor protection corporation. Is this true?"

No. The MFDA Investor Protection Corporation (other than in Quebec) protects investors from losses experienced as a direct result of the bankruptcy of a mutual fund company. Protection is up to $1 million per customer account in respect of the loss of securities, cash, and other property held by an MFDA member. Losses caused by other reasons, such as a change in the market value of mutual fund securities, unsuitable investments, or defaults of an issuer of a mutual fund are not covered.

Which of the following investment funds continually issues shares to investors and redeems these shares on demand at net asset value? a. Closed-end Fund. b. Mutual Fund. c. Fixed Trust. d. Redeemable Investment Fund.

Open End Funds or Mutual Funds continually issue shares to investors and redeem these shares on demand at the current net asset or "break up" value per share of the fund's investment portfolio. Mutual funds range from those primarily seeking safety of principal and income through the purchase of mortgages, bonds and blue chip preferred and common shares, to much more aggressive funds primarily seeking capital gain through trading common shares in growth industries.

The major difference between Schedule I and Schedule II banks is: Federal regulatory provisions Ownership Organizational structure Services offered

Ownership is the primary difference between Schedule I and II banks. Schedule I banks are Canadian owned, widely held institutions subject to rules that restrict the control of any individual or group to no more than 20% of the outstanding shares. Schedule II banks are foreign bank subsidiaries authorized under the Bank Act to accept deposits that may be eligible for deposit insurance provided by the Canada Deposit and Insurance Corporation. Schedule II banks may engage in all types of business permitted to Schedule I banks.

What impact can interest rate volatility have on the revenues of securities firms in Canada? a. Securities firms will see their revenues increase as investors buy and sell more frequently to profit from the volatility. b. Securities firms will not be affected as they make most of their money from underwriting. c. Securities firms will not be affected as they are all highly capitalized and can ride out any problems. d. Securities firms can suffer heavy losses because of their fixed costs, such as large staff and communications networks.

Returns in the securities business tend to be high in bull markets, reflecting the risks and volatility inherent in the industry. However, with their heavy exposure to loss in trading and underwriting and their costly and extensive staff and communication networks, securities firms are especially vulnerable to cyclical business swings, dramatic and unpredictable ebbs and surges in bond and stock trading volumes, and securities price and interest rate gyrations not only in Canada but also throughout the world.

A large furniture store has chosen to sell its consumer instalment contracts to generate cash. Which of the following financial intermediaries would the furniture store choose? a. Chartered bank. b. Insurance company. c. Sales finance company. d. Investment dealer.

Sales finance companies purchase, at a discount, instalment sales contracts from retailers and dealers when such items as new automobiles, appliances or home improvements are bought on instalment plans.

What are federally regulated foreign bank subsidiaries that have been authorized under the Bank Act to do banking business in Canada referred to as? a. Schedule I banks b. Schedule II banks c. Schedule III banks d. Schedule IV banks

Schedule II banks are incorporated and operate in Canada as federally regulated foreign bank subsidiaries. These banks can engage in all the types of business that are permitted to Schedule I Banks. Schedule III banks are federally regulated foreign bank branches of foreign institutions that have been authorized under the Bank Act to do banking business in Canada. Most are full-service branches, able to accept deposits, while some are merely lending branches. Examples of Schedule III banks in Canada include HSBC Bank USA, Comerica Bank, and Mellon Bank, N.A.

"How am I protected if the bank goes bankrupt?"

The Canada Deposit Insurance Corporation (CDIC), a federal Crown corporation, provides up to $100,000 protection on customer savings in case a member bank fails or goes bankrupt. Most Canadian chartered banks are members of the CDIC. There are six categories of savings that are insured separately: savings held in one name savings held jointly savings held in trust savings held in an RRSP savings held in a RRIF, and savings held for paying realty taxes on mortgage payments.

An investment dealer has an important client who wants to quickly buy a large block of shares in ABC Co. without causing any significant price fluctuation. Select the action the dealer should take to accommodate the client. a. Sell the shares from inventory. b. Wait until that number of shares became available. c. Buy the shares slowly over the next few weeks. d. Use an ATS and complete the trade outside of market hours.

The dealer may also complete a separate buy or a separate sell transaction from its own inventory. There is no need to wait for simultaneous, matching buy-sell orders from other investors to complete an order. The relative speed and ease with which purchases or sales may be made from inventory greatly adds to the liquidity of already issued securities (i.e., the size of an order that can be quickly absorbed without undue price fluctuation).

When acting as agent, a securities firm: Does not own the securities that are being bought or sold. Earns a profit on the spread between the purchase and sale price of the security. Owns the securities being traded. Focuses primarily on bond trading.

The firm does not own the securities and so can not profit from the spread between the purchase price and the sale price. When acting as agent, the securities firm earns a profit by charging a commission for each transaction that it brokers between a buyer and a seller.

Which of the following represents a process by which insurance companies, owned by policyholders, reorganize into companies owned by shareholders? a. Prudent portfolio approach. b. Consolidation. c. New product development. d. Demutualization.

The insurance industry is undergoing change due in part to increased competition. Demutualization is a process by which insurance companies, owned by policyholders, reorganize into companies owned by shareholders. Policyholders, in effect, become shareholders in an insurance corporation. Demutualization will likely lead to consolidation among insurance companies and the emergence of fewer, larger companies.

The Insurance Companies Act requires companies to adhere to investment rules based on which of the following approaches. a. Legal for life. b. Investment grade only. c. The basket clause. d. Prudent portfolio.

The key federal legislation governing insurance companies is the Insurance Companies Act. The bill establishing the Act was proclaimed June 1, 1992. The legislation permits life insurance companies to explicitly own trust and loan companies and thus enter new financial businesses through subsidiaries. The Act also requires insurance companies to adhere to investment rules based on a "prudent portfolio approach" which replaces the "legal for life" rules. Companies are prohibited from acquiring substantial investments in entities other than a list of authorized financial and quasi-financial entities. The Act also sets out a number of portfolio limits designed to limit exposure to real property and equity securities.

The main source of a life insurance company funds is: Savings accounts Segregated fund fees Policy premiums Mortgage loans

The main source of a life insurance company's funds is premiums on whole life, term, and group policies. Other sources include premiums on annuities, pensions, and group plans; interest on policy loans and mortgages; and interest and dividends on securities and mortgages already owned.

What is the difference between the primary market and the secondary market?

The primary market is the market where a security is sold when it is first issued and sold to investors. On this market, the user of capital, such as a business or government, receives capital from investors. The secondary market is the market where subsequent trading takes place and individual investors trade among themselves.

What is the difference between what banks pay as interest on deposits and what they charge as interest on loans called? a. Spread. b. Return. c. Margin. d. Credit.

The principal activity of the banks is to loan funds to businesses and consumers at interest rates higher than those which they must pay in interest on deposits and other borrowings. The spread between the two sets of interest rates covers the banks operating costs (rent, salaries, administration, appropriations for loan losses, etc.) as well as providing a margin for the banks profits. The other type of income which is earned is fee income, which refers to the various service and other charges levied on customers.

During a bought deal, who accepts the risk that the issue may not sell as expected? Issuing company Underwriter Investment advisor Investor

The underwriter (dealer) assumes the risk that the issue may not sell as successfully as expected. When acting as principal in an underwriting of securities, the dealer purchases the issue from the company for resale to the market or clients.

Trust companies: Can act as trustees in charge of individual assets. Can sell insurance at the branch level. Can offer only a limited range of products and services. Can act as a securities dealer in the primary market.

Trust companies are the only corporations in Canada authorized to act as a trustee in charge of corporate or individual assets. Additionally, trust companies offer a broad range of financial services. They are permitted to accept savings, issue term deposits, make personal and mortgage loans, and sell RRSPs.

A securities firm that does not assume ownership of securities at some stage in the buying and selling transaction with investors acts as which of the following? a. Principal. b. Agent. c. Market maker. d. Underwriter.

When a broker acts as an agent, it acts for or on behalf of a buyer or a seller but does not itself own title to the securities at any time during the transaction. The broker's profit is the commission charged for each transaction. When a securities firm acts as a dealer or principal, it owns securities as part of its own inventory at some stage in the buying or selling process with investors. The difference or spread between buying and selling prices is the dealer's gross profit or loss.

How does capital investment affect Canada's growth?

When capital investment declines, the result is insufficient output, diminishing productivity, rising unemployment and decreasing competitiveness in domestic and international markets, all of which lead to lower living standards. Sufficient capital ensures that Canada has enough productive capacity in place to compete in the global economy.

For certain types of distributions through an exchange, which of the following documents may be accepted in lieu of a standard prospectus? a. Statement of material facts (or exchange offering prospectus). b. Free form prospectus. c. Exchange listed letter-of-intent. d. Articles of incorporation (or memorandum of association).

a

What might explain the increase in offerings of marketable bonds by the Government of Canada? a. The Government ran a budget deficit last year. b. The Government has discontinued offering Canada Savings Bonds. c. The Government wanted to pay back a large investor. d. The Government was redeeming shares from shareholders.

a

Which of the following is a difference between the auction and dealer markets? a. Prices are publicly visible in the auction market but not in the dealer market. b. The auction market deals primarily with bonds and the dealer market primarily with stocks. c. Transactions in the dealer market occur through an exchange while in the auction market through computer networks. d. Investment dealers earn commissions in the dealer market and a spread in the auction market.

a

ARC Investments, a small dealer member, is unhappy about legislation the federal government is considering. Recommend who ARC should approach to present arguments against the legislation. a. Investment Industry Regulatory Organization of Canada (IIROC). b. Investment Industry Association of Canada (IIAC). c. Ombudsman for Banking Services and Investments (OBSI). d. Canadian Investor Protection Fund (CIPF).

B The IIAC is a member-based professional association that represents the interests of market participants. It represents the investment industry's views and interests to federal and provincial governments and their agencies, and to other SROs in such areas as securities and capital markets legislation and regulation and fiscal and monetary policy.

What is the main responsibility of the MFDA? a. To decide arbitration disputes brought against its members. b. To regulate the distribution side of the mutual funds industry. c. To act as a public policy advocate. d. To ensure financial compliance of member companies.

B The MFDA will be responsible for regulating the distribution side of the mutual funds industry while the funds themselves remain the responsibility of the securities industry.

What is the general requirement for information contained in a prospectus? a. Continuous disclosure of material facts. b. Full, true and plain disclosure of material facts. c. Timely disclosure of relevant information. d. Uniform application of listing requirements.

B The prospectus must contain full, true and plain disclosure of all material related to the issue

William works as foreman for Waddington Woolworks, a Canadian company listed on the TSX. Cathy is president of Canadian Carpet Company, which owns 15% of the outstanding common shares of Waddington Woolworks. Donald is a Director of David's Clothing, a chain of mens clothing stores which is 100% owned by Waddington Woolworks. William, Cathy and Donald each purchase shares in Waddington Woolworks. Who is required to file Insider Reports with the securities administrator? a. William and Donald. b. Cathy and Donald. c. William and Cathy. d. All three are required to file.

B William does not have to file as he is not a senior officer of Waddington Woolworks. For the purposes of disclosure provisions of the acts, insiders are generally defined to include any of the following: A director or senior officer of the company, or a subsidiary; A person or company (excluding underwriters in the course of public distribution) beneficially owning, directly or indirectly, or controlling or directing more than 10% of the voting shares of the company; A director or senior officer of a company which is itself an insider of the company due to ownership, control or direction over more than 10% of the voting shares of the company involved; A reporting issuer where it has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities. In some circumstances, insiders of Corporation A that has itself become an insider of Corporation B, may be deemed to be insiders of Corporation B. When dealing with trades relating to securities of a company that has been involved in such transactions, care should be taken to ascertain whether the persons involved are deemed under the relevant legislation to be insiders.

Monique, a Quebec resident, is thinking of buying a 7-year GIC from a financial institution that offers investor or deposit insurance protection. Select the financial institution from which she should purchase the GIC. a. A chartered bank, covered by CDIC. b. A mutual fund company covered by the IPC. c. An investment dealer, covered by the CIPF. d. An insurance company covered by the OBSI.

C Monique should give her business to an investment dealer covered by the CIPF as all investments in an account are covered (up to a suggested limit). CDIC only covers GICs up to 5 years. The IPC is not recognized in Quebec and the OBSI does not offer deposit insurance.

Which of the following statements about the National Registration Database (NRD) is true? a. The NRD is used exclusively to file registration forms for approval with the TSX. b. The NRD is a paper-based system used by IAs when applying for approval with the IIROC or the CSA. c. The NRD allows an IA to make a single electronic submission to satisfy registration requirements. d. The NRD allows the federal government to track money-laundering activities through the banking system.

C The National Registration Database (NRD) is a web-based system used by investment dealers and employees to file registration forms electronically when applying for approval by any one or more of the stock exchanges, the CSA or the IIROC. The NRD is designed to enable a single electronic submission to satisfy all jurisdictions in Canada.

Mary Moneypenny is an Investment Advisor for a Canadian Investment Dealer firm. On Tuesday Ms. Moneypenny visits a client and discusses an IPO her firm is underwriting. At the end of the meeting, her client agrees to purchase 500 shares at the $20 offer price. Ms. Moneypenny accepts the cheque and leaves her client with the prospectus. On Friday, her client calls and asks to cancel the order as he believes the forecasts in the IPO are too optimistic. Ms. Moneypenny: a. is legally obligated to cancel the order due to the Right of Withdrawal rule. b. is legally obligated to cancel the order due to the Right of Rescission rule. c. is under no legal obligation to cancel the order. d. is legally obligated to cancel due to both the Withdrawal and Rescission rules.

C The Right of Withdrawal rule has a two business day time limit after receipt or deemed receipt of the prospectus. Therefore, the time period has expired. The Right of Rescission rule must be brought when a prospectus or amended prospectus offering the security contains misrepresentation.

How many days do customers have to file a claim with the CIPF when a firm goes bankrupt or insolvent? a. 60 days. b. 90 days. c. 120 days. d. 180 days.

D The Fund covers customers' losses of securities and cash balances, within the limits described below from the insolvency of a member firm of any one of the Sponsoring Self-Regulatory Organizations. A limit has been placed by the Fund on the coverage provided for a customer's general account equal to $1,000,000 for losses related to securities and cash balances. Separate accounts of customers are each entitled to the maximum coverage of $1,000,000 unless they are combined with other separate accounts. Customers have 180 days to file a claim with the Fund. The 180 day period commences on the date of bankruptcy, if applicable, or the date of insolvency as determined and communicated by the Fund.

How is the securities industry regulated in Canada? a. By OSFI. b. By the CIPF. c. By the Bank of Canada. d. By the appropriate provincial regulator.

D The securities industry in Canada is regulated by the provinces. In several provinces, the day to day regulation is delegated to Securities Commissions. In other provinces, securities regulators are appointed by the province.

In Canada, securities firms that underwrite new securities generally act as which of the following? Principal Agent Market maker Broker

Underwriting is generally handled by principals in the primary market because it relates to bringing a new issue of securities, stocks, or bonds to market. Agency transactions generally take place in the secondary market for existing and outstanding securities.

What role does CNSX play in the Canadian marketplace? a. To act as an additional marketplace for senior securities that trade on the TSX. b. To provide an alternative market to the TSX Venture Exchange for emerging companies. c. To provide additional liquidity for trading on the TSX and TSX Venture Exchange. d. To act as the primary Government of Canada bond trading platform

b

What type of investment product has its value based on an underlying instrument? a. Bonds. b. Derivatives. c. Stocks. d. Treasury bills.

b

Where does the Ontario Securities Commission require firms to report unlisted trades in Ontario? a. QTRS b. CUB c. NEX d. PETS

b

A firm needs to raise capital but does not want to give up ownership or pledge any assets as security. Recommend the type of instrument the company should issue. a. Equity. b. Bonds. c. Debentures. d. Mutual Funds.

c

A new company needs additional financing but does not meet the requirements to be listed on an exchange. What could its owners do? a. The company could list on the CNSX. b. The company could approach the MX for special approval. c. The company could approach private equity investors. d. The company must wait until it has a better track record.

c

Retired People Fund is a large pension fund. They want to sell some of the shares in their portfolio, but think that to get the best price and lowest commissions they may need to deal directly with the potential buyer. They are required, however, to work through an existing organized trading system. Which of the following entities would best suit their needs? a. CUB b. CBID c. An ATS. d. The TSX.

c

Which of the following is a characteristic of capital? a. It is stable. b. It is highly regulated. c. It is mobile. d. It is plentiful.

c