Practise reflective questions to see if you have idea about all areas.

Chapter 1
Investment Dealer: An individual who acts on behalf of another party to buy and sell securities
and other investments. Also called an underwriter.
Self-Regulatory Organizations (IIROC, MFDA)
https://www.investopedia.com/terms/d/depth-of-market.asp
Depth of market also refers to the number of shares, which can be bought of a particular
corporation, without causing price appreciation. If the stock is extremely liquid and has a large
number of buyers and sellers, purchasing a bulk of shares typically will not result in noticeable
stock price movements.

Read more: Depth of Market https://www.investopedia.com/terms/d/depth-of-

market.asp#ixzz58eFpZor7
Follow us: Investopedia on Facebook
https://www.investopedia.com/university/moneymarket/moneymarket1.asp
https://en.wikipedia.org/wiki/Broker-dealer
http://www.osc.gov.on.ca/en/Marketplaces_sro_index.htm
https://www.investopedia.com/ask/answers/012615/whats-difference-between-primary-and-
secondary-capital-markets.asp
https://www.investopedia.com/terms/m/marketmaker.asp

Chapter 2
Foreign investors invest in Canadian business
Capital investment is for growth
Municipal governments may issue: installment debentures
Debentures lower right than bond; no collateral
Higher volume of trading, CUB – Dealer Market

Ice Futures deals with other than futures

Chapter 3

In Canada, financial institutions are federally regulated, while the security industry is provincially
regulated.
https://www.securities-administrators.ca/aboutcsa.aspx?id=80
CDIC does not apply to dealer member accounts.
Note the difference between: Full, true, and plain disclosure, Gatekeeper role, Know Your Client,
Relationship disclosure.
OSFI doesn’t deal with securities industries but federally registered banks, insurance companies,
RRSP.

The Universal Market Integrity Rules (UMIR) are a common set of trading rules that apply in all
markets in Canada. They set out specific rules that identify the gatekeepers’ responsibilities and
establish formal reporting procedures

Chapter 4

Real GDP is also called as "constant-dollar GDP" or "constant-price GDP." Real GDP is a more
accurate measure of economic performance.
Inflation distorts the signal prices sent to participants in market economies, where prices are critical
for balancing supply with demand; rising prices draw resources into areas of scarcity, and falling
prices move funds away from glutted areas.

Note the following:

 Leading, coincident and lagging indicators.

 Factors affecting interest rates and exchange rates.
 Balance of payment: current account and capital account

Chapter 5

Fiscal policy is the use of the government’s spending and taxation powers to pursue such economic
goals as full employment and sustained long-term growth. Both the federal and provincial governments
administer fiscal policy, although the federal government, through its annual budget, tends to play the
dominant role.

Responsibility for implementing monetary policy rests with the Bank of Canada. The goal of monetary
policy is to preserve the value of money by promoting sustained economic growth with price stability.
Specifically, the Bank aims to keep the rate of inflation, as measured by the annual rate of increase in
the consumer price index, inside a target range.

The bank ensures trading in the overnight money market stays within the 50 basis point band through
two main open market operations: SPRAs and SRAs
The overnight market is where major Canadian financial institutions lend each other money on an
overnight basis. Changes in the overnight rate result from fluctuation in all other interest rates in the
market.

Bank of Canada performs as a fiscal agent to the federal government

A large national debt constrains the government's fiscal policy options. For example, in a recession,
the government cannot increase the deficit to stimulate the economy as this would also increase the
national debt level.

Chapter 6

https://www.investopedia.com/investing/introduction-convertible-bonds/

https://www.investopedia.com/video/play/sinking-fund/

https://www.investopedia.com/terms/p/purchasefund.asp

http://www.moneysense.ca/save/taxes/capital-gains-explained/

Negative pledge: The negative pledge clause is designed to mitigate risks to bondholders by restricting
certain activities in which the borrower can participate. Generally, this involves preventing the issuing
organization from using assets to support another debt obligation if the transaction would have a
negative impact on current bondholders

For real return bonds both principal and interest are adjusted for inflation.

Chapter 7

The current yield looks at the current price of a bond instead of its face value and represents the return
an investor would expect if the bond was purchased and held for a year. \

 Capital gains or losses on holding the bond are not factored into the calculation. For example,
if you purchased this bond today and held it until maturity, you would realize a capital loss on
the investment because you bought it for more than you will receive at maturity.
 The calculation ignores reinvestment of the regular coupons.


 If a bond's current yield is less than its YTM, then the bond is selling at a discount.
 If a bond's current yield is more than its YTM, then the bond is selling at a premium.
 If a bond's current yield is equal to its YTM, then the bond is selling at par.

(Page 100 CFA Scheweser volume)

The yield curve is a snapshot of bond yields across the maturity spectrum. It illustrates the
relationship between the yields of short-term and long-term bonds with similar credit risk and reflects
the market consensus of expected future rates. The yield curve is typically constructed using
Government of Canada bonds.

Although each of the theories proposed is useful in explaining the future direction of interest rates, it
is probably best to use a combination of these theories when trying to determine future interest
rates.

An investor who buys a bond between interest dates is required to pay the accrued interest to the
seller. The accrued interest paid is the interest amount that has accrued since the last interest
payment date.

Formula

(𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 +/− 𝑃𝑟𝑖𝑐𝑒 𝐶ℎ𝑎𝑛𝑔𝑒 )

𝐴𝑝𝑝𝑟𝑜𝑥 𝑌𝑇𝑀 = × 1000
(𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑃𝑟𝑖𝑐𝑒 + 𝑃𝑎𝑟 𝑉𝑎𝑙𝑢𝑒)/2

Note:

 Interest income and price change should be based on similar compounding periods
 As long as interest income and price change are based on same period; YTM calculation is
independent of frequency of compounding

Current Yield =

Regular interest payments on bonds include the day of the payment. Thus, the first day of accrued
interest starts the day after the payment date. In this example, the regular payment is made on
January 1 and accrued interest starts on January 2. The seller is entitled to the interest up to the day
that the buyer legally owns the bond.

Chapter 8

Restricted shares only restrict the holder’s voting rights. The three primary categories are: Non-
voting, subordinate voting, and restricted voting. Non-voting shares have no voting rights.
Subordinate voting shares carry a right to vote, if another class of shares is outstanding and those
shares carry a greater voting right on a per share basis, and restricted voting shares carry a right to
vote, subject to a limit or restriction on the number or percentage of shares that may be voted by a
person, company, or group.

A federal dividend tax credit of the taxable amount of eligible Canadian-source dividends (a gross-up
amount of actual eligible dividends) can be claimed to reduce federal and provincial taxes payable.
Qualifying Canadian-source dividends are identified by type on various tax slips.
Last Date to receive dividend = Record Date – 2, If record date = Wed, Thu, Fri

Last Date to receive dividend = Record Date – 4, If record date = Mon, Tue

https://training.csi.ca/shared/products/CSC/2017/EN/CSC/html/LA_CommonShares_E_RAAOCS.ht
ml

However, though owning preferred shares carries more risk than owning bonds, the dividends
payable on preferreds are well below bond yields. The lower yield is because dividends, unlike debt
interest, are paid with after-tax dollars and consequently shareholders receive a tax credit on their
dividends, which they do not receive on interest income.

If a company’s board of directors votes not to pay one or more preferred dividends when due, the
unpaid dividends accumulate in what is known as arrears. Minon would be entitled to receive the
value of all unpaid dividends, not just the current year’s dividend or the amount that has accrued
since she purchased the shares.

https://training.csi.ca/shared/products/CSC/2017/EN/CSC/html/LA_PreferredShares_E_pg5.html

https://training.csi.ca/shared/products/CSC/2017/EN/CSC/html/LA_PreferredShares_E_pg8.html