Chap 2 Flashcards
What is the difference between direct/indirect investment?
Direct is buying a tangible item such as a home. Indirect is buying securities.
Name the 3 characteristics of capital
Mobile, sensitive to environment, scarce
Name 3 users of capital
Individuals, businesses, governments
What is the name of debt securities offered by federal govt vs municipal
T-Bills, bonds vs instalment debentures
What are debt instruments
Fixed-income instruments such as bonds, debentures, mortgages, Tbills, commercial paper
What are equity instruments
stocks
What are derivatives
Options/forwards
What are 3 characteristics of liquid markets?
Frequent sales, narrow spreads, small price fluctuations sale to sale
What is an auction market
Where buyers bid and sellers enter offers for stocks
What do the following Canadian exchanges sell? TSX, TSXV, TSX Alpha, Montreal Exchange, Natural Gas exchange, CSE, Aequitas NEO, ICE Futures Canada
TSX Alpha - same sort of stuff as TSX/TSXV
Montreal Ex - futures/options
Natural Gas - electronic trading and central counterparty clearing to north american natural gas/electricity markets
CSE - emerging companies
Aequitas - listing services, facilitates trading in securities listed on Aequitas, TSX and TSXV
ICE Futures - agricultural futures/options
What is a dealer market?
OTC - network of dealers trade with each other, where almost all bonds and debentures are sold, only dealers’ bid/ask are entered by those dealers, more trading volume than equities
What are the two roles of investment dealers
1) Transfer capital from savers to users through underwriting and distribution
2) Maintain secondary market
How are securities mainly regulated?
Provincially through securities administrator
What does the Canadian Securities Administrator do?
Provincial regulators working together to harmonize regulations of capital markets in Canada
What is a self-regulatory organization
Private industry organizations granted the privilege of regulating their own members by provincial regulatory bodies
