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CSC Volume 1 Questions and Answers Graded A+
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CSC Volume 1 Questions and Answers Graded A+
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CSC Volume 1 Questions and Answers Graded A+2 reasons for using fix income securities - ANSWER--to finance operations or growth
-to take advantage of operating leverage
2 wys to measure gdp - ANSWER-income
expenditure
3 characteristics of capital - ANSWER-mobile
sensitive to the environment
scarce
3 components of the financial industry - ANSWER-markets
instruments
intermediaries
3 main groups that interact in the economy - ANSWER-consumer
firms
government
3 theories of yield - ANSWER-expectations
liquidity preference
market segmentation
3 types of firms - ANSWER--Integrated firms
-institutional firms
-retail firms
4 economic theories - ANSWER-rational expectations
keynesian
monetarist
supply side economics
4 steps in calculating bonds present value - ANSWER-choose discount rate
calculate the pv of the bond's coupon payments
calculate the pv of the bond's principal to be received at maturity
add these present values together to determine its worth today
50 basis points - ANSWER-0.5%
6 major canadian banks - ANSWER-RBC Royal Bank
CIBC
,BMO Bank of Montreal
Scotiabank
TD Bank Financial Group
National Bank of Canada
A bond trading above par - ANSWER-premium
A bond trading at a quoted price of 100 - ANSWER-par
A bond trading below par - ANSWER-discount
accounts and products insured by CDIC Include - ANSWER--savings and chequing
accounts
-GICs and other term deposits that mature in 5 years or less
-money orders, certified cheques, traveller's cheques and bank drafts
-accounts that hold realty taxes on mortgaged properties
accrued interest - ANSWER-amount of interest built up during the previous holding
period
act uses 3 basic methods to protect investors - ANSWER-1. registration of securities
dealers and advisors
2. disclosure of facts necessary to make reasoned investment decisions
3. enforcement of the laws and policies.
actual unemployment less than natural unemployment - ANSWER-shortage of workers
could lead to higher wages and an increase in inflation
advantage for an issuer to use the Short Form Prospectus System - ANSWER-shortens
the time period by which a new issue may be offered to the public
advantage of a foreign payed preferred - ANSWER-It provides protection against a
decline in the value of the Canadian dollar
after acquired clause - ANSWER-all assets can be used to secure the loan, even those
acquired after the bond was issued
allow significant news to be reported and widely disseminated - ANSWER-temporary
halt on trading
Alternative Trading Systems (ATS) - ANSWER-are privately owned computerized
trading facilitates that match buy and sell orders for securities traded outside of
recognized exchanges.
can be owned by inimical brokerage firms or by groups of brokerage firms.
, have the potential to threaten market stability die to lessened market transparency,
cross-border trading issues and technological glitches such as insufficient system
capacity.
members and regulated by IIROC
taking market share away from traditional market exchanges
ask - ANSWER-lowest price a seller will accept
BA - ANSWER-bankers acceptance
commercial draft
sold at a discount and mature at face value
tade in 1000 multiples, min investment of 25k, 30 - 90 days
typically offer a higher yield than Tbills
back office - ANSWER-settle the firm's security transactions in an efficient and effective
manner; known as the trade settlement function
-Security trades are not complete until they are "settled"
Bank Rate - ANSWER-minimum rate at which the Bank of Canada will lend money on a
short-term basis to the chartered banks and other members of the Canadian Payments
Association (CPA)) in its role as lender of last resort
**it is the upper limit of the target range
banks - ANSWER-Largest 6 _____ control more than 90 percent of 2.9 trillion in assets
bid - ANSWER-Highest price a buyer is willing to pay for the security being quoted
bond - ANSWER-long-term, fixed-obligation debt security that is secured by physical
assets.
bond maturity types - ANSWER-money market 1 YR >
short term 5 YR>
medium term 10 YR >
long-term 10 YR<
bond properties - ANSWER-longer term bonds are more volatile than short term
lweor coupon bonds are more volatile
relative yield change is more important than absolute yield change
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