Free CSC Volume 2 Questions and Answers

Question 1

Which monetary policy alternatives should the Bank of Canada select to raise inflation expectations given that inflation is substantially lower than expected?

Accepted Answer

Sell T-Bills to chartered banks

Answer

Inflation expectations are simply the rate at which investors, consumers and businesses expect prices to rise in the future. If the Bank of Canada (BoC) buys Treasury Bonds, the government places deposits in the chartered banks to settle the purchases. By doing this, the BoC increasing excess reserves.

Question 2

Exactly three years after its issuance, an investor buys $1,000 par value of a 10-year bond with a 1-% anul coupon rate for $115. What is the yield on the bond when it matures?

Accepted Answer

7.20%

Answer

The number of years to maturity in the yield to maturity calculation is seven, not ten.

The calculation is
FV = 1,000
N = 7, PV = $-1,150
PMT = 100
I = 7.20%

Question 3

What might make a company's retained earnings drop in the next years?

Accepted Answer

The company's common shares are expected to decrease

Answer

Profits accumulated over time that have not been distributed as dividends to shareholders are known as retained earnings. The board of directors decides to raise the dividend, which lowers retained earnings or cash in the company, even if these retained profits belong to the shareholders. A record of the entire comprehensive income maintained by the company year after year is provided by retained earnings.

Question 4

The management of ZZZ Corp. said on January 1st that all shareholders of record as of Thursday, January 21st, would receive a dividend, which would be paid on January 31st. When do the shares start trading ex-dividend?

Accepted Answer

Friday, January 22nd

Answer

The distribution of profits to shareholders is represented by dividends. Dividends are paid to shareholders "on record," which implies that in order for an investor to get the dividend, they must own shares on the record date. Stocks trade one business day ahead of the record date, ex-dividend. Holidays and weekends are not business days.

Question 5

Shares in a non-registered trading account belong to Nigel. When the value of his shares has increased and he chooses to sell the stock, Nigel would:

Accepted Answer

None of the above

Answer

Common shares, sometimes referred to as stock, are a sort of equity security that Nigel owns and indicate an ownership position in the company. In the event that he sold his common shares, he would realize a capital gain.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

Free CSC Volume 2 Questions and Answers