CSC CANADIAN SECURITIES COURSE EXAM NEWEST ACTUAL EXAM COMPLETE 330 QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+.pdf

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How can a distribution trigger unexpected taxes for an investor? -
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m✔✔✔ Correct Answer > When the mutual fund itself sells a security for a capi
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tal gain, that gain is passed onto the investor who would have to claim it.
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How can diversification and low correlation reduce the risk of a portfolio? -
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m✔✔✔ Correct Answer > It reduces volatility and provides downside protectio
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n in periods of market stress.
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How can ETFs be used to help with tax loss harvesting? -
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m✔✔✔ Correct Answer > An ETF can be used to held avoid the superficial loss
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rule.
How do ETFs compare on tracker error? -
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m✔✔✔ Correct Answer > There is a higher risk for tracking error in mutual fun
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ds.
How do Event-Driven strategies work? -
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m✔✔✔ Correct Answer > They seek to profit from unique corporate structu
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re events such as mergers, acquisitions, stock splits, and buybacks.
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How do mutual funds and ETFs compare in terms of tax efficiency? - ✔✔✔
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Correct Answer > ETFs are more tax efficient because of low portfolio turnover.
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How do mutual funds and ETFs compare on advisor comp? -
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m✔✔✔ Correct Answer > With ETFs the client pays a commission to the dealer,
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mwhereas with mutual funds there are load charges, plus embedded comp for
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advisors.
How do mutual funds and ETFs compare on discounts and premiums to net ass
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et value? -
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m✔✔✔ Correct Answer > ETFs are bought and sold like stocks on the secondar
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y market, Mutual funds are purchased and redeemed directly from the mutual
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mfund at EOD nav per unit.
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,How do mutual funds and ETFs compare on management style? -
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m✔✔✔ Correct Answer > ETFs are mostly passive with some active. Mutual fun
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ds are mostly active with some passive.
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How do mutual funds and ETFs compare on minimum investment size? -
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m✔✔✔ Correct Answer > ETFs only have a 1 share minimum, Mutual funds usu
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ally have a $500 minimum.
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How do mutual funds and ETFs compare on transparency of holdings? -
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m✔✔✔ Correct Answer > Most ETFs provide full transparency, whereas mos
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t mutual funds limit the disclosure of holdings to once a month.
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How do relative Value strategies work? -
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m✔✔✔ Correct Answer > They attempt to profit by exposing inefficiencies of di
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fferences in the pricing of related stocks, bonds, or derivatives.
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How do RRSP contribution limits work when contributing to a spousal RRSP? -
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✔✔✔ Correct Answer > The plan holder may contribute to the spouse's plan o
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nly to the extent that contribution room is available In his or her own plan.
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How do you calculate a portfolio's long/short net expsoure? -
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m✔✔✔ Correct Answer > Net exposure % = (long exposure -
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mShort exposure) / Capital
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How do you calculate the adjusted cost base of convertible securities? -
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m✔✔✔ Correct Answer > You must figure out the $ figures of the share pri
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ce before conversion, and the divide it by the number of shares it can con
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vert into. m




How do you calculate the adjusted cost price of shares with rights? -
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m✔✔✔ Correct Answer > If it was a direct purchase, it would be based on the
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total outlay of funds divided by the number of common shares owned.
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How do you construct an equity market-neutral strategy? -
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m✔✔✔ Correct Answer m m


> You would simultaneously take long and short matched equity portfolios of
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approximately the same size. The goal is to have 0 or very low beta.
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How does a distressed security strategy profit? -
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m✔✔✔ Correct Answer > By buying securities in companies that are in financia
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l difficulty at a discount in hope that restructuring or liquidation of the compa
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ny will lead to a return.
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,How does in-kind exchange work? -
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m✔✔✔ Correct Answer > It is the process of designated brokers buying and s
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elling ETF units and exchanging them with the ETF provider for the ETF's und
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erlying securities. m




How does tax loss selling work? -
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m✔✔✔ Correct Answer > It involves selling a security near the end of the year
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usually to create an advantageous tax situation for the investor.
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How does the equity cycle relate to the business cycle? -
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m✔✔✔ Correct Answer > In the equity cycle, the contraction phase is the end o
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f expansion, through peak, and into contraction phase of the business cycle.
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The stock market trough is the late contraction phase to end contraction busi
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ness cycle phase. The recovery and expansion phase is the end of trough, and
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into recovery and expansion in the business cycle.
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The Equity cycle peal is the late expansion into peak phase in the business
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cycle.
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How is a contribution in kind to an RRSP treated for tax purposes? -
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m✔✔✔ Correct Answer > The capital gain or loss on the day of the deems disp
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osition must be calculated. Any resulting capital gain is included in income tax
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for the year of contribution. A capital loss cannot be used and is deemed as 0
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for tax purposes.
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How is a convertible arbitrage strategy constructed. -
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m✔✔✔ Correct Answer > Involves buying undervalued convertible securities an
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d hedging some or all of the underlying equity risk by shorting an appropriate
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amount of the issuer's common shares. Interest income produces a steady ret
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urn.
How is a long/short equity strategy constructed? -
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m✔✔✔ Correct Answer > You can either have a market-
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neutral strategy, and be long or short index futures, or, the PM will create pai
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r trades but have either a larger long or short position.
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Net market exposure will either be long or short.
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How is a short bias determined? -
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m✔✔✔ Correct Answer > The net position of the fund will always be short. Usu
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ally take naked shot positions. Can take long positions but net will always be s
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, hort.