CSC Canadian Capital Markets 2

Question 1

What does 'market capitalization' measure?

Accepted Answer

Total market value of a company's outstanding shares

Answer

Market capitalization equals the current share price multiplied by the total number of shares outstanding.

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

A repurchase agreement (repo) involves selling a security with a simultaneous commitment to repurchase it at a future date and price, effectively a short-term secured loan.

Question 3

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

Accepted Answer

CIPF

Answer

The Canadian Investor Protection Fund (CIPF) protects eligible customer accounts held at insolvent CIRO member firms up to specified limits.

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

A prospectus is a legal document that discloses all material information about a new securities offering so investors can make informed decisions.

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

Market makers stand ready to buy or sell a security at quoted prices, ensuring continuous liquidity and narrower bid-ask spreads.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

CSC Canadian Capital Markets 2