Chapter 8 - P2

Question 1

How are dividend paid when shares are registered in street certificate form?

Answer 1

dividends are paid to securities firm whose name appears on certificate then are credit to the accounts of the client who owns them.

Question 2

How far before the payment of dividends is the dividend record date?

Answer 2

Usually 2-4 weeks

Question 3

How do dividends work for CDRs

Answer 3

Canadian depository receipts pay dividends based on the number of underlying shares in Canadian dollars

Question 4

What price are CDRs issued at?

Answer 4

Originally at $20 then vary with the market

Question 5

Why do investors buy preferred shares?

Answer 5

1. higher yield than yield on bonds
2. Dividends from Canadian preferred shares are eligible for dividend tax credit
3. Return on preferred shares have low correlation to common share prices so offers diversification benefit

Question 6

What is an index point?

Answer 6

A measure of change in an index, for example 1% change in index trading at 25$ is a change of 2.5 index points

Question 7

What is S&P/TSX 60 Index

Answer 7

Measures 60 largest companies traded on TSX as measured by market cap, is broken down into 11 sectors that cover S&P/TSX Index subgroup (it is an index made out of stocks from the sub-index, not all stocks from sub-index are in index)