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Canadian Securities Course > Chapter One - The Capital Market > Flashcards

Chapter One - The Capital Market Flashcards

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SIE Exam flashcards
1
Q

What is investment capital?

A

It is available and investable wealth ( real estate, stocks, bonds, money)

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2
Q

What is the difference between direct and indirect investing ?

A

Direct investment is when an individual or company invests directly in an item ( house, new road )

Indirect investment occurs when an individual buys a security and the issuer invests the proceeds.

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3
Q

How do individuals use capital ?

A

Generate through savings

Use capital to finance major purchases or for consumption

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4
Q

What are three characteristics of capital?

A

1) sensitive
2) mobile
3) in short supply

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5
Q

How do businesses use capital?

A

to finance day to day operations, to renew and maintain plant and equipment, and expand activities

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6
Q

How do Governments use capital?

A

when expenditures exceed revenue and to finance large projects

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7
Q

How do foreign investors use capital?

A

they invest in Canada to access returns on investment

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8
Q

Describe Debt (bonds or debentures)

A

the issuer promises to repay a loan at maturity, and in the interim makes payments of interest. Term of maturity can be short or long. (5 or 10 years)

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9
Q

Equity (stocks)

A

the investor buys a share that represents a stake in the company

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10
Q

Investment funds (mutual funds, segregated funds)

A

a company or trust that manages investments for its clients.

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11
Q

Derivatives (options , futures, rights)

A

products derived from an underlying instrument , such as a stock, financial instrument commodity or index

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12
Q

other investment products ( linked notes, exchange-traded funds)

A

investments that are relatively new and do not fit into any of the standard categories.

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13
Q

What is private equity?

A

is the financing of firms unwilling or unable to find capital using public means- via stocks and bonds

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14
Q

Who is the main investors in the private equity market?

A

private pension plans, endowments, foundations, wealthy individuals.

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15
Q

What is the primary market?

A

initial sale of securities to an investor

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16
Q

What is the secondary market?

A

the transfer of already issued securities among investors

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17
Q

What are dealer markets?

A

they are a network of dealers that trade with each other directly on a negotiated market with market makers.

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18
Q

Most bond and debentures trade on these markets?

A

Dealer Markets

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19
Q

What is an auction market?

A

clients bid and ask quotations for stock are channeled to a single central market (stock exchange) and compete against each other.

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20
Q

What is political environment?

A

whether the country is involved or likely to be involved in internal or external conflict

21
Q

What are economic trends?

A

growth in gross domestic product, inflation rate, levels of economic activity etc.

22
Q

What is a Fiscal Policy?

A

levels of taxes and government spending and the degree to which the government encourages savings and investment.

23
Q

What is a monetary policy?

A

the sound management of the growth of the nation’s money supply and the extent to which it promotes price and foreign exchange stability

24
Q

Investment Opportunities?

A

opportunities for investment and satisfactory returns on investment when considering the risks to be accepted

25
Q

What are characteristics of the labour force?

A

whether it is skilled and productive…

26
Q

What is the only source of capital?

A

SAVINGS

27
Q

What are retail investors?

A

They are individual investors who buy and sell securities for their own personal accounts, and not for another company or organization

28
Q

What are institutional investors?

A

are organizations such as a pension fund or mutual fund company, that trade large volumes of securities and have steady flow of $$ to invest.

29
Q

What are foreign investors tend to concentrate on?

A

tended to concentrate in particular industries: petroleum, natural gas, manufacturing and mining and smelting.

30
Q

What is a leveraged buyout?

A

The acquisition of companies financed with equity and debt. Buyouts are one of the most commonly used forms of private equity

31
Q

What is growth capital?

A

the financing of expanding firms for their acquisition or high growth rates.

32
Q

What is turnaround?

A

investments in underperforming or out of favour industries that are in financial need or operating restructuring

33
Q

What is Early Stage Venture Capital?

A

Investment in firms that are in the infancy stages of developing products or services in high growth industries ( health care and technology)

34
Q

What is Late Stage Venture Capital?

A

The financing of firms which are more established but still not profitable enough to be self-sufficient. Revenue growth is still high.

35
Q

What is distressed debt?

A

This is the purchase of debt securities of private or public companies that are trading below par due to financial troubles

36
Q

What is a bid?

A

the highest price a buyer is willing to pay for the security being quoted.

37
Q

What is the ask ( or offer)?

A

this is the lowest price a seller will accept

38
Q

What is the spread?

A

this is the difference between the bid and ask prices

39
Q

What is the last price?

A

is the price at which the last trade on that stock took place

40
Q

What is a stock exchange?

A

is the market place where buyers and sellers of securities meet to trade with each other and where prices are established according to the laws of supply and demand

41
Q

What does the TSX stand for and list?

A

Toronto Stock Exchange - senior equities, some debt instruments (convert to equity), income trusts, exchange traded funds (ETFs)

42
Q

What does TSX Venture Exchange trade?

A

-junior securities and a few debenture issues

43
Q

What dose CNSX stand for and trade?

A

Canadian National Stock Exchange - trades securities of emerging companies

44
Q

What does MX stand for and trade?

A

The Montreal Exchange - trades all financial and equity futures and options.

45
Q

What does ICE Futures Canada trade ?

A

agricultural futures and options

46
Q

CanDeal?

A

Offers institutional investors access to Government securities and to money market instruments.

47
Q

CBD?

A

operates two distinct marketplaces: retail and institutional .

48
Q

CANPX?

A

information processor for government and corporate debt securities that provides investors with real time bid and offer prices and hourly trade data.

Canadian Securities Course (2 decks)

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