AFM 121 EXAM ACTUAL QUESTIONS AND VERIFIED
CORRECT ANSWERS
what is capital?
-savings of individuals, corporations and governments
- is money used in financial markets
3 components of wealth transfer process
1. financial instruments (what's bought/sold)
2. financial markets (facilitate buying)
3. financial intermediaries (people/companies help facilitate markets)
what is a direct investment
purchase assets to generate wealth (land, real estate, equipment)
what is an indirect investment?
purchase financial assets (stocks, bonds, treasury bills), that can create wealth through
capital gains/dividends
capital is
mobile, scarce and sensitive
Who receives proceeds from sale in primary market
issuer
who receives proceeds from sale in secondary markets?
previous owner of shares
how is primary market efficiency measured?
, speed, cheapness, liquidity
Example of a financial intermediary?
Bank of Canada
How do stock exchanges make money?
- transaction fees for investors
- listing fees for issuers
- fees for companies making changes
- sale of historic data
T/F: Securities regulation is a provincial responsibility
true
Example of a securities commision?
- Ontario Securities Commission (OSC)
- BC Securities Commission (BCSC)
Self Regulatory Organizations?
- owned by its members that regulate and police themselves
Investment Industry Regulatory Organization of Canada
SRO players?
- Canadian Depository for Securities (CDS)
- Canadian Investor Protection Fund (CIPF)
- Canadian Securities Institute (CSI)
Types of brokers?
- full service ("high touch" service and advice, high fees)
- discount (limited services, no advice, low fees)
CORRECT ANSWERS
what is capital?
-savings of individuals, corporations and governments
- is money used in financial markets
3 components of wealth transfer process
1. financial instruments (what's bought/sold)
2. financial markets (facilitate buying)
3. financial intermediaries (people/companies help facilitate markets)
what is a direct investment
purchase assets to generate wealth (land, real estate, equipment)
what is an indirect investment?
purchase financial assets (stocks, bonds, treasury bills), that can create wealth through
capital gains/dividends
capital is
mobile, scarce and sensitive
Who receives proceeds from sale in primary market
issuer
who receives proceeds from sale in secondary markets?
previous owner of shares
how is primary market efficiency measured?
, speed, cheapness, liquidity
Example of a financial intermediary?
Bank of Canada
How do stock exchanges make money?
- transaction fees for investors
- listing fees for issuers
- fees for companies making changes
- sale of historic data
T/F: Securities regulation is a provincial responsibility
true
Example of a securities commision?
- Ontario Securities Commission (OSC)
- BC Securities Commission (BCSC)
Self Regulatory Organizations?
- owned by its members that regulate and police themselves
Investment Industry Regulatory Organization of Canada
SRO players?
- Canadian Depository for Securities (CDS)
- Canadian Investor Protection Fund (CIPF)
- Canadian Securities Institute (CSI)
Types of brokers?
- full service ("high touch" service and advice, high fees)
- discount (limited services, no advice, low fees)
