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A test with 22 multiple-choice questions related to capital, private equity, stock trading, market makers, bonds, debentures, investment marketplaces, and portfolio management. The questions are designed to test the knowledge of the reader on these topics.
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a) Capital is mobile and sensitive. b) When capital is scarce, it becomes more expensive. c) An example of direct investing is government building a new hospital. d) Buying stocks is an example of direct investing while buying corporate bonds is an example of indirect investing.
a) It is less risky than investment in public equity. b) Institutions are forbidden from private equity investing. c) The asset class, “private equity” includes both debt and equity. d) Private equity investments tend to be more liquid than public equity.
a) an investor is buying shares from another investor. b) an investor is buying shares from the issuing company. c) the issuing company is buying shares from an investor. d) trading in stocks does not take place on the secondary market.
a) if you want to buy the stock right now you must pay $15.00 and if you want to sell the stock right now you will receive $15.25. b) if you want to buy the stock right now you should pay between $15. and $15.24 and if you want to sell the stock right now you will receive between $15.01 and $15.24. c) if you want to buy the stock right now you must pay $15.25 and if you want to sell the stock right now you will receive $15.00. d) market makers are not responsible for posting bid-offers.
a) frequent sales. b) long trading hours. c) small price fluctuations from sale to sale. d) narrow price spread between bid and offering price.
a) TSX Venture b) Montreal Exchange c) ICE Futures Canada d) Toronto Stock Exchange
a) dealer markets. b) auction markets. c) Bonds are sold through dealer markets. Debentures are sold through auction markets. d) Bonds are sold through auction markets. Debentures are sold through dealer markets.
a) dealer markets and listed markets. b) dealer markets and auction markets. c) listed markets and unlisted markets. d) unlisted markets and over-the-counter markets.
a) SEC. b) OSFI. c) IIROC. d) The trading activity of ATSs is not subject to regulation.
a) bonds. b) options. c) derivatives. d) mutual funds.
a) retail, wholesale, and integrated. b) retail, wholesale, and institutional. c) retail, institutional, and integrated. d) institutional, boutiques, and integrated.
a) front office. b) middle office. c) back office. d) The portfolio management team is a stand-alone division unto itself.
a) $1,000,000 in her Investment Account. b) $1,000,000 in her Investment Account or $700,000 in her RRSP account. c) $1,000,000 in her Investment Account and $700,000 in her RRSP account. d) $1,250,000 in her Investment Account and $700,000 in her RRSP account.
a) caveat emptor – Let the buyer beware! b) full, true, and plain disclosure of all pertinent facts. c) approval of the investment merits of each class of securities. d) providing investors the ability to sue if their investment dealer loses them money.
a) another name for insider trading. b) short-selling without declaring the short sale. c) profitable trading based on enhanced analysis. d) whereby a registrant trades ahead of a known client.
a) comparative audited financial statements must be filed within 120 days of financial year-end for companies listed on the TSX Venture Exchange. b) comparative audited financial statement must be filed within 90 days of financial year-end for senior issuers listed on the TSX. c) comparative unaudited financial statements must be filed within 60 days of the end of each of the first three quarters of the financial year for companies listed on the TSX Venture Exchange. d) comparative audited financial statements must be filed within 45 days of the end of each of the first three quarters of the financial year for senior issuers listed on the TSX.
a) She would not be protected under the Right of Withdrawal because it was over 48 hours since she placed the trade to purchase the securities. b) She would not be protected under the Right of Rescission because she did not read the prospectus. c) She would be protected under the Right of Withdrawal because it was less than 48 hours since she received the final prospectus. d) She would be protected under the Right of Rescission as long as she examined the final prospectus and found that there was at least one material misrepresentation.
a) An absentee ballot. b) A power of attorney. c) A nominee owner form. d) A beneficial owner form.
a) 5% b) 20% c) 35% d) 85%
a) report the change the same day. b) report the change within three calendar days of the trade. c) report the change within five calendar days of the trade. d) Directors of companies are not subject to insider reporting rules.
a) Direct investment occurs when savers directly buy securities issued by government and corporations, indirect investment occurs when those savers sell the securities to other savers. b) Indirect investment occurs when the saver buys the securities issued by government and corporations, which in turn use the funds for direct investment in plant, equipment, etc. c) Direct investment occurs when savers directly buy an ownership position from a corporation, indirect investment occurs when savers purchase debt securities from government or corporations. d) There is no link between direct and indirect investment.
a) The Government runs a surplus and it must raise taxes. b) The Government runs a surplus and it must cut spending. c) The Government runs a deficit and it must borrow money. d) The Government runs a deficit and it must spend money.
a) junk bonds. b) low-grade debt. c) distressed debt. d) bankruptcy debt.
a) The Toronto Stock Exchange (TSX) lists senior equities and some debt instruments. b) The Montreal Exchange (Bourse de Montreal) trades all financial and equity futures and options. c) ICE Futures Canada trades agricultural futures and options. d) The TSX Venture Exchange trades junior securities, income trusts and ETFs.
a) CUB. b) CBID. c). QTRS. d) Trades of unlisted securities do not have to be reported in Canada.
a) bid markets. b) bid-ask markets. c) listed markets. d) unlisted markets.
a) i) only b) ii) only c) i) & ii) only d) ii & iii) only
a) It is operated by the TMX group. b) It is recognized as both an ATS and investment dealer. c) It is a joint venture between Canada’s six largest investment dealers. d) It offers both institutional and retail investors access to Government securities and money market instruments.
a) It operates both retail and institutional marketplaces. b) It provides investors with real time bid and offer prices. c) Issues include Government of Canada bonds and treasury bills and provincial bonds. d) It is a joint venture of the Investment Industry Association of Canada (IIAC)/IIROC member firms.
a) i), ii) & iv) only b) i), ii) & iv) only c) i), iii) & iv) only d) i), ii), iii) & iv)
a) SEC. b) CSA. c) IIAC. d) OSFI.
a) against the bankruptcy of member firms. b) from unprofessional investment advisors. c) from companies which disappoint investors with their income reports. d) against losses suffered from premature redemptions of mutual fund units.
a) $ 80,000. b) $100,000. c) $600,000. d) Insufficient information.
a) It’s a method of dispute resolution. b) The arbitrator’s decision is binding. c) It’s designed for claims of $100,000 or less. d) Clients who lose in arbitration may then sue the firm.
a) disclosure of necessary facts. b) enforcement of laws and policies. c) registration of dealers and advisors. d) analysis of publicly traded securities.
a) Confirming a transaction where no trade has been executed (bucketing). b) Causing the last sale of the day to be higher than warranted by market conditions (window dressing). c) Making a practice of taking the opposite side of the market to clients. d) Trading for a client’s account prior to trading in the Investment Advisor’s own account (front running).
a) The investor must not have received the prospectus. b) There must have been something ambiguous in the prospectus. c) There must have been an error in the prospectus, no matter how slight it may have been. d) There must have been an untrue statement or omission of a material fact in the prospectus.
a) One week b) Fifteen days c) One months d) Ninety days
a) Insiders are not allowed to trade under any circumstances. b) Insiders are allowed to trade as long as they are report their trades prior to making any trade. c) Insiders are allowed to trade as long as they report their trades within five calendar days of making any trade. d) Insiders are allowed to trade and do not have to report their trades to anyone.
a) how minimum wage laws affect the supply of labour. b) if higher taxes on alcohol would impact the tourism industry. c) the impact of higher interest rates on investment in capital equipment. d) the relationship between tuition costs and the decision to attend university versus college.
a) Net National Product b) Net Domestic Product c) Gross National Product d) Gross Domestic Product
a) prices will fall. b) corporate profits will increase. c) more goods and services will be sold. d) there will be a cycle of demand-pull inflation.
a) expansion b) peak c) contraction d) trough
a) leading indicators. b) co-incident indicators. c) lagging indicators. d) the Composite Index.
a) inflation. b) labour costs. c) unemployment. d) personal income.
a) a 5% drop in economic activity. b) two consecutive quarters of declining real GDP. c) two consecutive quarters of declining nominal GDP. d) None of the above.
a) Participation rate and unemployment rate b) Employment rate and unemployment rate c) Working-age population and participation rate d) Working-age population and unemployment rate
a) i) and ii) only b) i) and iii) only c) ii) and iii) only d) i), ii) and iii)
a) impossible to achieve. b) consistent with stable inflation. c) consistent with strong economic growth. d) consistent with zero structural and frictional unemployment.
a) Higher inflation results in higher real interest rates. b) The greater the default risk, the higher the interest rates. c) An increase in the savings rate will lower interest rates. d) A large government deficit raises the demand for capital.
a) the nation is not benefiting from trade. b) the nation is running a deficit in its capital account. c) the nation is running a surplus in its capital account. d) the balance of payments is in a state of disequilibrium.
a) interest rates will be higher in the US and its currency will appreciate. b) interest rates will be higher in the US and its currency will depreciate. c) interest rates will be lower in the US and its currency will appreciate. d) interest rates will be higher in the US and its currency will depreciate.
a) market forces. b) the Central Bank. c) the Federal Government. d) the International Monetary Fund.
a) Keynesian and Monetarist b) Keynesian and Supply-Side c) Monetarist and Supply-Side d) Rational Expectations and Keynesian
a) to conduct monetary policy. b) to issue and remove bank notes. c) to prepare balanced federal budgets. d) to act as the government’s fiscal agent.
a) 25 b) 50 c) 100 d) 200
a) to narrow the limit of the operating band. b) to relieve undesired upward pressure on overnight financing rates. c) to relieve undesired downward pressure on overnight financing rates. d) to influence call loans and the interbank deposit rates through the large value transfer system.
a) that the Chartered Banks are redepositing money with the Bank of Canada which puts upward pressure on interest rates. b) that the Chartered Banks are redepositing money with the Bank of Canada which puts downward pressure on interest rates. c) that the Bank of Canada is redepositing money with the Chartered Banks which puts downward pressure on interest rates. d) that the Bank of Canada is redepositing money with the Chartered Banks which puts upward pressure on interest rates.
a) the supply of a given stock is unlimited. b) the demand for a given stock will not fluctuate in the short run. c) the demand for a given stock will not fluctuate in the long run. d) this establishes the price at which a stock will be exchanged at any point in time.
a) there is inflation in the system. b) there is deflation in the system. c) the constant dollar approach is used. d) the constant dollar approach is not used.
a) Increases in population. b) Improvements in technology. c) Increases in the capital stock. d) Increases in government spending.
a) this tends to have a deflationary effect. b) this tends to have an inflationary effect. c) firms enjoy higher profit margins in the short run. d) consumers enjoy lower prices in the long run.
a) trough b) recession or contraction c) recovery d) peak
a) leading indicators. b) co-incident indicators. c) lagging indicators. d) determinants of interest rates.
a) two declining quarters of real GDP. b) two declining quarters of nominal GDP. c) four declining quarters of real GDP. d) the same as the Statistics Canada definition: The depth, duration and diffusion of the decline in business activity.
a) the participation rate will increase. b) the participation rate will decrease. c) the participation rate will be unaffected. d) either a) or b) depending on the phase of the business cycle.
a) i) & ii) b) i) & iii) c) i), ii) & iii) d) i), ii), iii) & iv)
a) demand for interest-rate sensitive products like automobiles should be expected to decrease. b) Canadian bonds should be expected to decline in value. c) American consumers will have to pay more to service their household debt, which means a decline in discretionary spending on goods and services made in Canada. d) the Canadian dollar should be expected to appreciate.