CSC Volume 1 Exam with Complete
Solutions
What does SRO stand for and what does it do - correct Answer-Self Regulatory
Orgnaization is delegated tasks from the securities commissions when the commision
regulators are too far away to manage details
SRO is accountable because they are under the CIRO
They oversee investment dealers, mutual fund ealers, and trading activity on Canada's
debt, equity, and mutual fund marketplaces
What does CIRO stand for and what does it do - correct Answer-Canadian Investment
Regulatory Organization establishes and enforces industry regulations that protect
investors and maintain fair, equitable, and ethical practices
What does the CIPF do and what does it stand for - correct Answer-Canadian investor
protection fund provides insurance and protection against dealer/mutual fund dealer
insolvency.
Functions of principals - correct Answer-they transfer capital from suppliers to users
through the underwriting and distribution of new securities
what is underwriting - correct Answer-When the dealer acts as a principal and buys the
whole lot from the issuer (attempting IPO), assumes the risks of ownership, and then
sells it in the open market.
Part of the primary market distribution
purchasing a new set of shares from a government/company on a given date at a
specified price
After primary distribution, dealers act as principals by maintaining the inventory of
already issues, outstanding securities
What are market makers - correct Answer-Dealers acting as principals who buy and sell
securities at a specific price, they make money, but also add liquidity to the market
What is an integrated firm - correct Answer-offer both retail and institutional markets,
which contribute to the 2 different sales department
, they underwrite types of federal, provincial, municpal, and corporate debt and equity
issues
ative in secondary and foreign markets
what are principal transactions - correct Answer-dealers owning securities as part of
their inventory during some point of the transaction.
some underwriting may be involved
what is netting - correct Answer-brokers have hundreds of investors they deal with, so
when all the transactions are being cleared with the CDS, the CDS adds up all of
"broker 1's" buy and sell transactions. They "net out" the money to minimize money
transferred by "broker 1."
What is the bank act - correct Answer-federal legislation that sets out operating rules
and restrictions for banks, typically updated every 5 years
Banks are allowed to be part of these different financial services, but are controlled by
the Bank Act
Difference between Schedule I, II, and III banks - correct Answer-Schedule I banks are
domestic banks even thought they have foreign shareholders
Canada's six big banks are, BMO, CIBC, National Bank of Canada, RBC, Scotiabank,
and TD
Due to asset size, achieved by retail branches and atms throughout Canada
Schedule II Banks are allowed to do some of the same things as a Schedule I bank, but
derive most of their revenue from retail banking and electronic financial services
(AMEX, Citibank, UBS)
Schedule III Banks focus on institutional finance and investment banking (Barclays
Bank and Comerica Bank)
The canadian government allows them to operate in Canada, which allows Canadian
Schedule I banks operate abroad
Defined benefit vs. defined contribution pension plans - correct Answer-DB provices pre
determined payment amounts for when they retire, but DC allows for investments over
time, but employers have to cover shortfalls with DC which affects financial statements
What is a mutual fund - correct Answer-
what is a closed end fund - correct Answer-
what is a consumer instalment contract - correct Answer-
Solutions
What does SRO stand for and what does it do - correct Answer-Self Regulatory
Orgnaization is delegated tasks from the securities commissions when the commision
regulators are too far away to manage details
SRO is accountable because they are under the CIRO
They oversee investment dealers, mutual fund ealers, and trading activity on Canada's
debt, equity, and mutual fund marketplaces
What does CIRO stand for and what does it do - correct Answer-Canadian Investment
Regulatory Organization establishes and enforces industry regulations that protect
investors and maintain fair, equitable, and ethical practices
What does the CIPF do and what does it stand for - correct Answer-Canadian investor
protection fund provides insurance and protection against dealer/mutual fund dealer
insolvency.
Functions of principals - correct Answer-they transfer capital from suppliers to users
through the underwriting and distribution of new securities
what is underwriting - correct Answer-When the dealer acts as a principal and buys the
whole lot from the issuer (attempting IPO), assumes the risks of ownership, and then
sells it in the open market.
Part of the primary market distribution
purchasing a new set of shares from a government/company on a given date at a
specified price
After primary distribution, dealers act as principals by maintaining the inventory of
already issues, outstanding securities
What are market makers - correct Answer-Dealers acting as principals who buy and sell
securities at a specific price, they make money, but also add liquidity to the market
What is an integrated firm - correct Answer-offer both retail and institutional markets,
which contribute to the 2 different sales department
, they underwrite types of federal, provincial, municpal, and corporate debt and equity
issues
ative in secondary and foreign markets
what are principal transactions - correct Answer-dealers owning securities as part of
their inventory during some point of the transaction.
some underwriting may be involved
what is netting - correct Answer-brokers have hundreds of investors they deal with, so
when all the transactions are being cleared with the CDS, the CDS adds up all of
"broker 1's" buy and sell transactions. They "net out" the money to minimize money
transferred by "broker 1."
What is the bank act - correct Answer-federal legislation that sets out operating rules
and restrictions for banks, typically updated every 5 years
Banks are allowed to be part of these different financial services, but are controlled by
the Bank Act
Difference between Schedule I, II, and III banks - correct Answer-Schedule I banks are
domestic banks even thought they have foreign shareholders
Canada's six big banks are, BMO, CIBC, National Bank of Canada, RBC, Scotiabank,
and TD
Due to asset size, achieved by retail branches and atms throughout Canada
Schedule II Banks are allowed to do some of the same things as a Schedule I bank, but
derive most of their revenue from retail banking and electronic financial services
(AMEX, Citibank, UBS)
Schedule III Banks focus on institutional finance and investment banking (Barclays
Bank and Comerica Bank)
The canadian government allows them to operate in Canada, which allows Canadian
Schedule I banks operate abroad
Defined benefit vs. defined contribution pension plans - correct Answer-DB provices pre
determined payment amounts for when they retire, but DC allows for investments over
time, but employers have to cover shortfalls with DC which affects financial statements
What is a mutual fund - correct Answer-
what is a closed end fund - correct Answer-
what is a consumer instalment contract - correct Answer-
