CHAPTER 1 | THE CANADIAN SECURITIES INDUSTRY

Question 1

When investment dealers act as an ____ on behalf of buyers or sellers, they do not own title to the securities that they deal with, at any time during the transactions. Their profit is the commission they charge for each transaction.

Answer 1

agent

Question 2

Also known as open-end funds, __________, continually issue shares to investors and redeem these shares on demand. Open-end funds are by far the larger, accounting for approximately 95% of aggregate funds invested.

Answer 2

mutual fund

Question 3

Also called ________, Investment dealers act as intermediaries by matching investors with the users of capital. Each side of a transaction has its own dealer who matches the trades through the markets.

Answer 3

broker

Question 4

Closed-end funds typically issue shares only at start-up or at other infrequent periods, whereas ________ (commonly called mutual funds) continually issue shares to investors and redeem these shares on demand.

Answer 4

open-end fund

Question 5

Trades and other transactions are cleared and settled through organizations such as _________ and banks. .

Answer 5

CDS Clearing and Depository Services Inc.

Question 6

A ________ is a retirement plan that requires an employer to make contributions to a pool of funds set aside for a worker’s future benefit. The pool of funds is invested on the employee’s behalf, and the earnings on the investments generate income to the worker upon retirement.

Answer 6

pension fund

Question 7

The process of confirming and matching security trade details

Answer 7

clearing

Question 8

Transfer of capital from suppliers to users through the underwriting and distribution of new securities.
This activity takes place in the primary market in the form of a ____________ (or primary offering).

Answer 8

primary market distribution

Question 9

__________ funds typically issue shares only at start-up or at other infrequent periods

Answer 9

closed-end fund

Question 10

When they act as ________, investment dealers may own the securities as part of their inventory, at some stage of the buying and selling transaction with investors. The difference between the buying price and the selling price of the securities is their gross profit or loss.
Another ______ transaction is underwriting. In the securities business, underwriting refers to purchasing from a government body or from a company a new issue of securities, on a given date at a specified price.

Answer 10

principal

Question 11

________ make direct cash loans to consumers, who are usually unable to secure a loan from a bank. ________ typically charge higher rates of interest than banks.

Answer 11

consumer finance company

Question 12

A category of investment dealers that make up the Canadian securities industry:
_________ include full-service investment dealers and self-directed brokers (also known as discount brokers).

Answer 12

retail firm

Question 13

A ______ is a stockbroker who carries out buy and sell orders at reduced commission rates compared a full-service broker. However, they do not provide investment advice or perform analysis on a client’s behalf.

Answer 13

discount broker

Question 14

Digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. ______ collects information from clients about their financial situation and future goals through an online survey and then uses the data to offer advice and automatically invest client assets.

Answer 14

robo-advisor

Question 15

A _____ is an institution such as a bank that borrows money from suppliers of capital and lends it to users of capital. An ______ can also play a more direct role, by raising capital by bringing a new issue of securities to the financial markets.

Answer 15

financial intermediary

Question 16

_________purchase instalment sales contracts from retailers and dealers at a discount, when items such as new cars, appliances, or home improvements are bought on instalment plans by consumers.

Answer 16

sales finance company

Question 17

________ take advantage of computer technology to support or enable a variety of banking and financial products and services, including online loans, electronic wallets, and automated financial planning software.

Answer 17

fintech

Question 18

The Alberta Treasury Branches (ATB Financial), known as _______, were formed in 1938 when chartered
banks pulled out their branches from many smaller towns. The ATB became a provincial crown corporation
in 1997 and was renamed ATB Financial in 2002. These banks provide a full range of financial services to
Albertans.

Answer 18

savings bank

Question 19

The barriers that inhibit information sharing across a bank’s various business units are commonly known as _________.

Answer 19

firewall

Question 20

Banks that are not a subsidiary of a foreign bank and are considered domestic banks even if they have foreign shareholders

Answer 20

schedule I bank

Question 21

Investment dealers that serve exclusively institutional clients, organizations that trade large volumes of securities.

Answer 21

institutional firm

Question 22

Incorporated banks operating in Canada as federally-regulated foreign bank subsidiaries

Answer 22

schedule II bank

Question 23

__________offer products and services across the industry and participate fully in both the retail and institutional markets. Most _____underwrite all types of federal, provincial, and municipal debt, as well as corporate debt and equity issues. They are active in secondary markets, including the money market, as well as on all Canadian stock exchanges and some foreign exchanges.

Answer 23

integrated firm

Question 24

Federally-regulated foreign bank branches of foreign institutions that have been authorized under the Bank Act to do banking business in Canada. ________ tend to focus on corporate and institutional finance and investment banking

Answer 24

schedule III bank

Question 25

_______ act on their clients’ behalf as agents in the transfer of financial instruments between different
investors. They sometimes also act as principals, rather than agents. In both cases, they play a significant role in the securities industry’s two main functions

Answer 25

investment dealer

Question 26

Considered the do-it-yourself approach to investing. They execute trades for clients at reduced rates, but they do not provide investment advice

Answer 26

self-directed broker

Question 27

_______sell their shares to the public, most often in the form of closed-end or open-end funds, and invest the proceeds in diverse portfolios of securities.

Answer 27

investment fund

Question 28

The irrevocable moment when cash and securities are exchanged.

Answer 28

settlement

Question 29

Operates as a member-based professional association, providing its members with assistance in market advancement, advocacy, reputation services, and member support. Specializes in lobbying for its members to benefit their business, and provides members with conferences, workshops, education and networking.

Answer 29

Investment Industry Association of Canada