CHAPTER 2 | THE CAPITAL MARKET

Question 1

Privately-owned computerized networks that match orders for securities outside of recognized exchange facilities. Also referred to as Proprietary Electronic Trading Systems (PETS).

Answer 1

alternative trading system (ATS)

Question 2

The lowest price a seller will accept for the financial instrument being quoted.

Answer 2

ask price

Question 3

Market in which securities are bought and sold by brokers acting as agents for their clients, in contrast to a dealer market where trades are conducted over-the-counter. For example, the Toronto Stock Exchange is an auction market.

Answer 3

auction market

Question 4

The difference between the current bid

and ask, calculated as Ask - Bid.

Answer 4

bid-ask spread

Question 5

The highest price a buyer is willing to pay for the financial instrument being quoted.

Answer 5

bid price

Question 6

Launched in 2003 as an alternative marketplace for trading equity securities and emerging companies

Answer 6

Canadian Securities Exchange

Question 7

An Internet web-based system for investment dealers to report completed trades in unlisted and unquoted equity securities in Ontario.

Answer 7

Canadian Unlisted Board Inc.

Question 8

Provides institutional investors with electronic access to federal bond bid and offer prices and yields from its six
bank-owned dealers.

Answer 8

CanDeal

Question 9

A joint venture of several IIROC member firms and operates as an electronic trading system for fixed income securities providing investors with real-time bid and offer prices and hourly trade data.

Answer 9

CanPX

Question 10

Has two distinct but related meanings. To an economist, it means machinery, factories and inventory required to
produce other products. To an investor, it may mean the total of financial assets invested in securities, a home and other fixed assets, plus cash.

Answer 10

capital

Question 11

An electronic trading system for fixed income securities operating in the retail market.

Answer 11

CBID

Question 12

An electronic trading system for fixed income securities operating in the institutional market.

Answer 12

CBID Institutional

Question 13

Securities representing ownership in a company. They carry voting privileges and are entitled to the receipt of
dividends, if declared. Also called common stock.

Answer 13

common share

Question 14

A market in which securities are bought and sold over-the-counter in which dealers acts as principals
when buying and selling securities for clients. Also referred to as the unlisted market.

Answer 14

dealer market

Question 15

Evidence of a share of ownership stake in the company that issued the security.

Answer 15

equity securities

Question 16

A natural gas exchange, headquartered in Calgary, Alberta that provides electronic trading, central counterparty clearing and data services to the North
American natural gas and electricity markets.

Answer 16

ICE NGX Canada

Question 17

Organizations, such as pension and mutual fund companies, that trade in large-share quantities or dollar
amounts. They typically have a steady flow of money to invest.

Answer 17

institutional investor

Question 18

An individual licensed to transact in the full range of securities. IAs must be registered by the securities
commission of the province in which he or she works. The term refers to employees of SRO member firms only. Also known as a Registrant or Registered Representative (RR).

Answer 18

investment advisor

Question 19

The price at which the last trade on a stock occurred.

Answer 19

last price

Question 20

1. The ability of the market in a particular security to absorb a reasonable amount of buying or selling at reasonable price changes. 2. A corporation’s current assets relative to its current liabilities; its cash position.

Answer 20

liquidity

Question 21

Provides market data and a trading platform with access to multi-dealer competitive pricing for a wider range of corporate bonds and other types of fixed-income instruments. Member of IIROC.

Answer 21

MarketAxess

Question 22

A trader employed by a securities firm who is authorized and required, by applicable self-regulatory organizations (SROs), to maintain reasonable liquidity in securities
markets by making firm bids or offers for one or more designated securities.

Answer 22

market maker

Question 23

That part of the capital market in which short-term financial obligations are bought and sold. These include treasury bills and other federal government securities, and commercial paper, and bankers’ acceptances and other instruments with one year or less left to maturity.
Longer term securities, when their term shortens to the limits mentioned, are also traded in the money market.

Answer 23

money market

Question 24

An exchange that provides listing services and facilitates trading in securities listed on the NEO Exchange, TSX, and the TSX Venture Exchange.

Answer 24

NEO Exchange

Question 25

A derivatives exchange that provides contracts to participants in the North American energy markets.

Answer 25

Nodal Exchange

Question 26

A market for securities made up of securities dealers who may or may not be members of a recognized
stock exchange. Over-the-counter is mainly a market conducted over the telephone. Also called the unlisted,
inter-dealer or street market. NASDAQ is an example of an over-the- counter market.

Answer 26

over-the-counter market

Question 27

A class of share capital that entitles the owners to a fixed dividend ahead of the company’s common shares and to a stated dollar value per share in the event of liquidation. Usually do not have voting rights unless a stated number of dividends have been omitted. Also referred to as preference shares.

Answer 27

preferred share

Question 28

The market for new issues of securities. The proceeds of the sale of securities in a primary market go directly to the company issuing the securities.

Answer 28

primary market

Question 29

Individual investors who buy and sell securities for their own personal accounts, and not for another company or organization. They generally buy in smaller quantities than larger institutional investors.

Answer 29

retail investor

Question 30

The market where securities are traded through an exchange or over-the counter subsequent to a primary offering. The proceeds from trades in a secondary market go to the selling dealers and investors, rather than to the companies that originally issued the shares in the primary market.

Answer 30

secondary market

Question 31

A marketplace where buyers and sellers of securities meet to trade with each other and where prices are established according to laws of supply and demand.

Answer 31

stock exchange

Question 32

The largest stock exchange in Canada with over 1,700 companies listed on the exchange.

Answer 32

Toronto Stock Exchange

Question 33

An exchange that provides trading in securities listed on TSX and TSXV. Order price and volume information is publicly available. Alpha Exchange is wholly owned by TMX Group Inc.

Answer 33

TSX Alpha Exchange

Question 34

Canada’s public venture marketplace, the result of the merger of the Vancouver and Alberta Stock Exchanges in 1999.

Answer 34

TSX Venture Exchange

Question 35

A market in which securities are bought and sold over-the-counter in which dealers acts as principals when buying and selling securities for clients

Answer 35

unlisted market