Chap 9: Equity Transactions

Question 1

Interest on a margin loan is calculated _____ on the debt balance (outstanding balance) in the account and charged monthly.

Answer 1

Daily

Question 2

The word margin refers to…..

Answer 2

the amount of funds the investor must personally provide.

Question 3

Not every dealer member allows margin accounts, and those that do must obtain the authorized ___________ from the client before any business is transacted.

Answer 3

Margin Account Agreement Form

Question 4

The amount of credit that a dealer member may extend to its clients for purchase of securities is strictly regulated and enforced by the __________

Answer 4

Investment Industry Regulatory Organization of Canada (IIROC)

Question 5

Securities eligible for reduced margin are eligible for loans up to ___________

Answer 5

70% of market value

Question 6

Equities listed for selling of $2 or more are eligible for loans up to _________

Answer 6

50% of market value

Question 7

If the price of the security falls, the value of the loan drops accordingly. The client must then _________ provide additional funds in the account tot cover the shortfall up to the original purchase price. This requirement to deposit additional money is known as a _________.

Answer 7

immediately

Margin Call

Question 8

The security price rises, the loan amount rises accordingly, and the client has access to additional funds in the account immediately. This additional amount is called __________.

Answer 8

Excess Margin

Question 9

Investment advisors entering an order for a short sale of a security for any client must clearly mark the sell-order ticket _________ , so that the trading department may process the order properly.

Answer 9

Short or S

Question 10

The TSX and TSX Venture Exchange compile and publicly report total short positions in applicable securities _________ times a month

Answer 10

2

Question 11

Order types are generally categorized according to the following characteristics:

Answer 11

Duration: How long is the order valid for?
Price restrictions: Have any limits been set on the price?
Special Instructions: Are there any special conditions attached to the order?
Other: For example, are there any changes to the original order?

Question 12

Tickets for orders for the accounts of partners, directors, officers, investment advisors, and specified employees (in some cases) must be clearly labelled

Answer 12

PRO, N-C (Non-client_, or EMP (Employee)

Question 13

This rule is applied within dealer members in its dealings with clients to ensure that a client’s order has priority over a __________

Answer 13

Professional Order

Question 14

In Canada, stock and bond certificates are not in the form of paper but held electronically to a very large extent by

Answer 14

A Clearing Corporation