AFM 121

AFM 121 CH 2 - THE CANADIAN SECURITIES INDUSTRY EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS GRADED A++ Canadian securities industry is regulated provincially through... laws and securities commissions what kind of responsibility are the securities commissions? a provincial responsibility example of securities regulation commissions Ontario securities commission (OSC) and BC securities commission (BCSC) securities commissions delegate some of their power to... self regulatory org...

AFM 121 - MIDTERM MULTIPLE CHOICE EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS GRADED A++ Which of the following derive their value from the value of an asset a) Stocks B) Bonds c) Currency d) Derivative D) derivative The Canadian Depository for Securities (CDS) is involved in the clearing of stock trades? What does clearing actually mean? a) ensuring that the stock trade has been legally entered into b) providing finacing to the buyer of the stock facilitate the purchase c) se...

AFM 121 FINAL REVIEW EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS GRADED A++ Bonds vs. Debentures risk - Bonds secured by assets with collateral, debentures have no collateral beyond income/assets of borrower Bond terms - Legal rights of borrower & lender (investor) - Ex. Dates of coupon & principal payments What is the income from an increase in bond price called? - Interest income (not capital gains, due to tax) Maturity of Bonds (short,medium,long) - Short (1-5yrs) - Medium ...

AFM 121 CH. 1-3 EXAM QUESTIONS AND ANSWERS VERIFIED LATEST UPDATE Vital function of financial markets -Help facilitate transfer of capital -Those who have extra wealth (i.e. Have saved money) -Those who require capital (i.e. Want to invest money) 3 components of wealth transfer process 1. Financial instruments (what is actually bought / sold) 2. Financial markets (facilitate buying / selling of #1) 3. Financial intermediaries (people / companies involved in #1 and #2) Capital Savings...

AFM 121 CHAPTERS 6+ EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS GRADED A++ What does fixed income include? bonds, debentures, mortgagees, swaps, preferred shares Fixed streams of cash flows Coupon payments over time Principle repayments at maturity What is a bond A long-term debt instrument in which a borrower agrees to make payments of principal and interest, on specific dates, to the holders of the bond. bonds are secured by specific assets in the event of default, the bondhol...

AFM 121 FINAL EXAM QUESTIONS AND ANSWERS WITH COMPLETE DETAILED SOLUTIONS 100% GUARANTEED PASS What are preferred shares Provides cash payments/dividends These payments/dividends are fixed; hence, preferred shares are often viewed as fixed income not equity Most attractive to investor who wants a steady income What is a stock split? A company splits its shares thereby doubling (or tripling) its shares outstanding (in a 2 for 1 stock split, the share price is halved) Note****A stoc...

AFM 121 MIDTERM EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS GRADED A++ Capital - money, savings of individuals, corporations, governments Direct Investments - assets that generate wealth Financial Assets: stocks, bonds, treasury bills - Companies and governments issue these assets and receive funds - take these funds and invest them directly - Investors buy these assets to generate a return (ie. make more money than originally invested) Efficient Allocation of Capital - those ...

AFM 121 FINAL QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS GRADED A++ Bonds - Call provision Allows issuer to buy back bonds at specified call price before bonds mature. Issuer does this to prevent having to pay more coupon when market is paying less. Money market - Prime rate Basic interest rate on ST loans that banks charge their most creditworthy corporate customers Bellwether rate Rate serving as leader of future trends (Bell => warning) Bank rate Rate that BoC lends to comme...

AFM 121 FINAL EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS GRADED A++ Fixed Income: - Bonds, debentures, mortgages, swaps, preferred shares - Fixed stream of cash flows with coupon payments over time and principal repayment at maturity Bonds: Secured by specific assets, where bondholder can seize collateral in the event of default Debentures Unsecured, so there is no collateral beyond the general income and assets of the borrower Bond Terms: Terms are described in Bond Trust, wh...

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 invest...