Chapter 1+2

Question 1

sources of retirement incomes

Answer 1

• Employer pension plan
• CPP, QPP, OAS
• Income from personal savings
• Liquidation of fixed assets or principal residence downsizingg
• Sale of business, succession plan

Question 2

Defined benefit pension plan

Answer 2

Provide pre-determined specified payment amount of funds when they retire

Question 3

Defined contribution plan

Answer 3

allows employees+employer to contribute to a plan that invest funds over time

Question 4

capital

Answer 4

wealth (real and representional), has economic value that represents the invested savings of individuals/corps/gov/orgs

Question 5

indirect investment

Answer 5

purchase of representational items (stocks, bonds)

Question 6

characteristics of capital

Answer 6

mobility, sensitivity to its environment and scarcity

Question 7

retail investor

Answer 7

individual clients buy and sell securities for their personal accountsi

Question 8

institutional investors

Answer 8

org (pension, mututal funds companies) that trade in large-share quantities for dollar amount (usually have a steady flow of money)

Question 9

users of capital

Answer 9

• Individuals
• Businesses
• Governments

Question 10

fixed-income securities (debt securities)

Answer 10

issuer promises to repay the loan at maturity and makes interest payments to investors

eg: treasury bills, bonds

Question 11

equity securities (stocks/equities/shares)

Answer 11

form of ownership stake in the company that issued them

eg: common shares, preferred shares

Question 12

derivaties

Answer 12

a product whose value is derived from the value of an underlying instruments (stock/index)

eg: options, forward

Question 13

managed products

Answer 13

investment funds = pools of capital gathered from investors to buy securities according to a specific investment mandate

eg: mutual funds, etf. private equity