CSC Chapter 2 Questions and Answers
What is SRO?
Self-Regulatory Organization that establishes & enforce industry regulations to protect investors. The SRO monitors the market to ensure fairness in the market & governs the market activities
What is an CDS?
Clearing & Depositary Service wh...
CSC Chapter 2 Questions and Answers
What is SRO? - answer Self-Regulatory Organization that establishes & enforce
industry regulations to protect investors. The SRO monitors the market to ensure
fairness in the market & governs the market activities
What is an CDS? - answer Clearing & Depositary Service where trades are settled
What are financial intermediaries? - answer Are organizations that facilitates trade &
movement of financial instruments. They transfer capital between buyers & sellers.
They can act as agents & principals
What are agents? - answer Dealers acting as agents trade securities between clients
& issuers
What are principals? - answer Dealers acting as principals buy issues from the
issuers & sells them in the market. The take the risk of ownership. The spread is the
profit.
What is underwriting? - answer Dealers transfer capital buy purchasing new
securities for resale in the primary market. They sign & accepts the risks then maintains
the trades in the secondary market
What are subsidiaries? - answer A company's voting stock is >50% controlled by
another company
What are the 3 types of intermediaries firm? - answer Integrated Firm, Institutional
Firms, and Retail Firms
What is an integrated firm? - answer Offer products & services that covers both
institutional & retail firms. Most of its underwriting securities are sold on the secondary
market
What is an institutional firm? - answer More than 70 domestic & foreign firms serve
institutional clients with stocks & MF. They mainly deal with big clients
What is a retail firm? - answer includes full-service & discount brokers
What is a discount broker? - answer Execute trades on a low commission fee. But
they provide no investment advice.
What is an investment boutique? - answer Specializes in stocks, bonds, unlisted
stocks, portfolio management
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