CANADIAN SECURITIES COURSE EXAM

CANADIAN SECURITIES COURSE EXAM

QUESTION BANK WITH ACTUAL EXAM

QUESTIONS AND PRACTICE TESTS AND

STUDYGUIDE -

GUARANTEED PASS

What is capital appreciation and how does it effect common shares? Correct Answer It is the increase in value of a company's assets, which usually leads to the increase of value of its common shares.

What is the difference between a regular dividend and an extra dividend? Correct Answer A regular dividend is a specified amount to be paid out each year which will be maintained in most cases. An extra dividend is an extra bonus payment, usually at the end of the year in addition to the regular dividend. This payment should not be expected.

What is the difference between the cum-dividend period and the ex-dividend period? Correct Answer The ex dividend period is the period between when the divined is announced to when it is actually payed out. Investors who buy shares during this period are no entitled to the dividend. Cum-dividend are shares that are bought before the ex-dividend date, and they are entitled to the dividend.

How does the Ex-dividend date work? Correct Answer The Ex- dividend date is set 1 business day before the dividend record date. The last day stock trade cum-dividend is 2 business days 1 / 4

before the dividend record date because transactions take 2 days to settle.

How does a dividend reinvestment plan work? Correct Answer Some companies offer plans to automatically reinvest dividend payments into additional shares, which would lower the average cost per unit (called dollar cost averaging).

What is the difference between cash dividends and stock dividends? Correct Answer Cash dividends are paid in cash, stock dividends are in the form of additional stock. Usually used by rapidly growing companies.

What are the 3 types of restricted shares? Give a brief description

of each. Correct Answer 1) Non-voting shares: Have no voting

rights

2) Subordinate-voting shares: Can vote if another class of shares

is outstanding and those shares carry a greater voting right.

3) Restricted Voting Shares: Can vote, subject to a limit on the

number or percentage of shares that may be voted by a person or company.

What are the regulations regarding restricted shares as posted by the stock exchanges, and securities commissions. Correct Answer 1) Restricted shares must be identified by the appropriate restricted share term.2) Disclosure documents must be sent to shareholders.3) Restricted shares must be identified in the press with a code 4) Dealers and advisors must properly describe restricted shares 5) Trade conformations must identify restricted shares.6) Holders of restricted shares must be given notice of shareholder meetings.7) Minority approval is required for any corporate action that would result in the creation of new restricted shares.

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What does an Investment Dealer do? Correct Answer Acts as intermediaries between investors and users of capital.

When a Investment Dealer is acting as Primary, what are they doing? Correct Answer Selling securities from their own inventory.Make money via spread/underwriting.

When an investment dealer is acting as agents, what are they doing? Correct Answer Facilitating a trade between a buyer and seller, without owning the security. They make money via commissions.

What are the three types of Investment dealers? Correct Answer Retail firms, Institutional firms, and Integrated firms.

Give a brief description of retail firms. Correct Answer Includes full service investment dealers and self directed brokers.

Give a brief description of Institutional firms. Correct Answer They serve institutional clients and organizations that trade large volumes like pension funds.

Give a brief description of Integrated firms. Correct Answer Offer products and services that participate in both retail and institutional markets. Most firms underwrite debt and equity issues and are active in the secondary markets.

What are the roles of front, middle, and back offices of an

investment dealer firm? Correct Answer Front Office: Portfolio

management, Trading, Sales, Marketing.

Middle Office: Compliance, Accounting, Audits, Legal

Back Office: Trade settlement.

What services do investment dealers provide? Correct Answer They provide advice about new issues, They act as market 3 / 4

makers, They buy stocks as principal becoming more competitive in serving their institutional clients, They add liquidity to secondary markets which enhances the primary markets.

What is a Market Maker Correct Answer A trader that maintains liquidity in securities markets by taking large positions to enhance liquidity and sooth out price distortions.

What does the Clearing and Depository Services (CDS) do?Correct Answer It clears security transactions daily using a process called netting to establish and confirm a credit or debit position.

What are the three types of chartered banks? Correct Answer Schedule I,II, & III banks

Describe Schedule I Banks Correct Answer Banks such as TD, RBC. They offer loans, savings and deposits from businesses and consumers. They also sell mutual funds and other investment options, and mortgages.

Describe Schedule II Banks Correct Answer Such as Citi Canada, AMEX Canada. Are foreign bank subsidiaries, They do everything schedule I banks do plus commercial loans to business, issue financial paper in money markets, take deposits for businesses and sell mutual funds and other investments.

Describe Schedule III Banks Correct Answer Such as Deutsche, Comerica. Most are full service foreign bank branches of foreign banks and accept deposits, not usually lending.

What type of bank has strict ownership rules? Correct Answer Schedule I banks ( a single shareholder cannot own more than 20%).

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