CSC Canadian Capital Markets 2

Question 1

What does 'market capitalization' measure?

Accepted Answer

Total market value of a company's outstanding shares

Answer

Total revenue generated by a company annually

Answer

Book value of a company's total assets

Answer

Amount of capital raised in an IPO

Question 2

An investor buys a security and simultaneously agrees to sell it back at a specified price and date. This is known as a:

Accepted Answer

Repurchase agreement (repo)

Answer

Short sale

Answer

Margin purchase

Answer

Limit order

Question 3

Which Canadian body provides investor protection coverage if a CIRO member firm becomes insolvent?

Accepted Answer

CIPF

Answer

CDIC

Answer

OSFI

Answer

AMF

Question 4

A 'prospectus' is required in the primary market primarily to:

Accepted Answer

Provide full, true, and plain disclosure of material facts to investors

Answer

Set the final price of the security after trading begins

Answer

Register the issuer with provincial tax authorities

Answer

Guarantee a minimum return to purchasers

Question 5

What is the role of a 'market maker' on an exchange?

Accepted Answer

Continuously quoting bid and ask prices to provide liquidity

Answer

Setting regulatory policy for listed companies

Answer

Auditing financial statements of public issuers

Answer

Managing IPO allocations for institutional clients

Question 6

Which term describes the difference between the price an underwriter pays for a new issue and the price at which it is offered to the public?

Accepted Answer

Gross spread (underwriting discount)

Answer

Accrued interest

Answer

Redemption premium

Answer

Dividend yield