Canadian Securities Exam Fast-Track Study Guide E-Book

W. Sean Cleary

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 389

Veröffentlichungsjahr: 2009

Beschreibung

Whether your career aspirations lie in banking, financial planning, the mutual fund industry or a brokerage, you can't avoid taking the Canadian Securities Exam. But there's a lot of material to know for the day of the examination, and it can be a daunting task to assimilate such a wide body of knowledge. The Wiley Canadian Securities Exam Fast-Track Study Guide is a quick-review tool that covers all the basics you need to know to pass the exam. It presents "quick hits" of the key points you need to know, in language that's easy to understand and follow. This concise study aid: * summarizes the essential, "need-to-know" information * highlights important topics * features multiple choice review questions at the end of each chapter * makes material easy to read, understand and remember * includes two practice exams and double the number of review questions in the last edition This edition has been completely updated and revised to reflect recent changes to the course and the exams. It features updates throughout, new questions and new practice exams, and it has been restructured for ease of use and comprehension. Don't let the stress and amount of material you need to know for the exam overwhelm you. Prepare yourself with the Wiley Canadian Securities Exam Fast-Track Study Guide. It's the perfect quick-review tool to wrap up your studying and help you focus on doing your best on the exam.

Leseprobe

Table of Contents

Title Page

Copyright Page

HOW TO USE THIS BOOK

DESCRIPTION

CSI GLOBAL EDUCATION INC. EXAM QUESTION GUIDELINES

ABOUT THE ONLINE VERSION

STUDY SUGGESTIONS

chapter 1 - THE CAPITAL MARKET

INTRODUCTION

SUPPLIERS AND USERS OF INVESTMENT CAPITAL - Investment Capital

THE ROLE OF FINANCIAL INSTRUMENTS

FINANCIAL MARKETS

chapter 2 - THE CANADIAN SECURITIES INDUSTRY

THE ROLE OF FINANCIAL INTERMEDIARIES

THE CANADIAN SECURITIES INDUSTRY

CHARTERED BANKS

OTHER INTERMEDIARIES

chapter 3 - THE CANADIAN REGULATORY ENVIRONMENT

REGULATORY ORGANIZATIONS

ARBITRATION

REGULATION AND INVESTOR PROTECTION

THE ETHICS OF TRADING

TAKEOVERS AND INSIDER TRADING

chapter 4 - ECONOMIC PRINCIPLES

OVERVIEW OF ECONOMICS

MEASURING THE ECONOMY

LABOUR MARKETS

INTEREST RATES

MONEY AND INFLATION

INTERNATIONAL ECONOMICS

chapter 5 - ECONOMIC POLICY

ECONOMIC THEORIES

FISCAL POLICY

MONETARY POLICY

chapter 6 - FIXED INCOME SECURITIES: FEATURES AND TYPES

OVERVIEW AND TERMINOLOGY

BOND FEATURES

GOVERNMENT OF CANADA SECURITIES

CORPORATE BONDS

chapter 7 - FIXED INCOME SECURITIES: PRICING AND TRADING

BOND PRICING PRINCIPLES

THE TERM STRUCTURE OF INTEREST RATES

DELIVERY, REGULATION, AND SETTLEMENT

BOND INDEXES

chapter 8 - EQUITY SECURITIES: COMMON AND PREFERRED SHARES

INTRODUCTION

COMMON SHARES

PREFERRED SHARE CHARACTERISTICS

STOCK INDICES AND AVERAGES

chapter 9 - EQUITY SECURITIES: EQUITY TRADING

CASH AND MARGIN ACCOUNTS

SHORT SALES

EQUITY TRANSACTIONS

chapter 10 - DERIVATIVES

INTRODUCTION

OPTIONS

FUTURES AND FORWARDS

RIGHTS AND WARRANTS

chapter 11 - FINANCING AND LISTING SECURITIES

BASIC FORMS OF BUSINESS ORGANIZATION

THE INCORPORATION PROCESS

GOVERNMENT AND CORPORATE FINANCING

THE FINANCING PROCEDURE

THE LISTING PROCESS

chapter 12 - CORPORATIONS AND THEIR FINANCIAL STATEMENTS

UNDERSTANDING FINANCIAL STATEMENTS

BALANCE SHEET

EARNINGS STATEMENT

OTHER COMPONENTS

chapter 13 - FUNDAMENTAL AND TECHNICAL ANALYSIS

OVERVIEW

FUNDAMENTAL MACROECONOMIC ANALYSIS

INDUSTRY ANALYSIS

FUNDAMENTAL VALUATION MODELS

TECHNICAL ANALYSIS

chapter 14 - COMPANY ANALYSIS

FUNDAMENTAL COMPANY ANALYSIS

INTERPRETING FINANCIAL STATEMENTS

ASSESSING PREFERRED SHARE INVESTMENT QUALITY

chapter 15 - INTRODUCTION TO THE PORTFOLIO APPROACH

INTRODUCTION

RISK AND RETURN

PORTFOLIO RISK AND RETURN

THE PORTFOLIO MANAGEMENT PROCESS

chapter 16 - THE PORTFOLIO MANAGEMENT PROCESS

DEVELOPING AN ASSET MIX AND SELECTING INVESTMENT STYLES

IMPLEMENTING THE ASSET MIX

MONITORING THE ECONOMY, THE MARKETS, THE PORTFOLIO, AND THE CLIENT

EVALUATING PORTFOLIO PERFORMANCE

chapter 17 - MUTUAL FUNDS: STRUCTURE AND REGULATION

INTRODUCTION

THE STRUCTURE OF MUTUAL FUNDS

REGULATION OF MUTUAL FUNDS

chapter 18 - MUTUAL FUNDS: TYPES AND FEATURES

TYPES OF MUTUAL FUNDS

FUND MANAGEMENT STYLES

REDEEMING MUTUAL FUND UNITS OR SHARES

COMPARING MUTUAL FUND PERFORMANCE

chapter 19 - SEGREGATED FUNDS

KEY FEATURES OF SEGREGATED FUNDS

MATURITY GUARANTEES AND BENEFITS

TAX CONSIDERATIONS

STRUCTURE

DISCLOSURE

REGULATION

INNOVATIONS IN SEG FUNDS

chapter 20 - HEDGE FUNDS

OVERVIEW OF HEDGE FUNDS

HEDGE FUND INDEXES

BENEFITS AND RISKS OF HEDGE FUNDS

DUE DILIGENCE

HEDGE FUND STRATEGIES

FUNDS OF HEDGE FUNDS

PRINCIPAL-PROTECTED NOTES (PPNs)

chapter 21 - ANALYSIS OF OTHER MANAGED PRODUCTS

CLOSED-END FUNDS

INCOME TRUSTS

EXCHANGE-TRADED FUNDS

LABOUR-SPONSORED VENTURE CAPITAL CORPORATIONS (LSVCCS)

MANAGED ACCOUNTS

INDEX-LINKED GUARANTEED INVESTMENT CERTIFICATES (GICS)

MORTGAGE BACKED SECURITIES (MBS)

UNIVERSAL LIFE INSURANCE

SCHOLARSHIP TRUSTS

INVESTMENT CONTRACTS

chapter 22 - CANADIAN TAXATION

TAXES AND TAXATION ISSUES

TAXATION OF INVESTMENT INCOME

TAX DEFERRAL PLANS

BASICS OF TAX PLANNING

chapter 23 - WORKING WITH THE CLIENT

THE PROCESS OF FINANCIAL PLANNING

FINANCIAL PLANNING AIDS

ETHICS AND THE FINANCIAL ADVISOR

CASE STUDIES

END-OF-CHAPTER REVIEW QUESTIONS

EXAM #1

EXAM #2

EXAM #1

EXAM #2

Acknowledgements

Copyright © 2009, 2006, 2001 by W. Sean Cleary

Care has been taken to trace ownership of copyright material contained in this book. The publishers will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions.

National Library of Canada Cataloguing in Publication Data

Cleary, W. Sean (William Sean), 1962-

eISBN : 978-0-470-67573-1

1. Securities — Canada — Examinations — Study guides. 2. Investments — Canada — Examinations — Study guides. I. Title.

HG4514.C.63’20971 C2009-902063-7

Production Credits

Interior design: Interrobang Graphic Design Inc.

Typesetting: Natalia Burobina

Printer: Tri-Graphic

John Wiley & Sons Canada, Ltd.

6045 Freemont Blvd.

Mississauga, Ontario

L5R 4J3

TR

HOW TO USE THIS BOOK

DESCRIPTION

This text is designed primarily for students who are enrolled in the Canadian Securities Course (CSC)TM through CSI Global Education Inc. and who are in their final stages of preparing to write either of their two CSC exams. CSI Global Education Inc. does not in any way endorse this product.

One of the most common concerns expressed by my past CSC students has been the abundance of material they need to know (and understand) for the day of the examination. This concern has been alleviated to a certain extent by the reorganization of the CSC, which has resulted in two exams covering approximately half of the course material each. However, there is still a lot of material covered in each of the exams, and it is a daunting task to assimilate such a wide body of knowledge. In fact, many students have been overwhelmed by this task and have performed below their capabilities as a result of the stress.

This study guide has been conceived and designed in order to help students avoid this problem, and focus on doing their best on the exam. It should be treated as a companion to the CSI materials, not a substitute. It is designed to help students review, digest, and prioritize the vast amount of material they should know. In other words, it provides “quick hits” of the information that’s deemed to be need-to-know, in order to do well on the CSC exams.

The focus of this study guide is the review, in abbreviated format, of material that has already been covered previously by students, and to provide them with the essential materials required to pass the exams.1

With this focus in mind, the text includes the following features:

1. The main body of the text provides a clear, succinct summary of the most important topics covered in the CSC textbooks.

2. Within the chapter summaries, high-priority topics will be noted for students, as indicated by a shaded vertical rule with an exclamation mark.

3. Each chapter includes a number of multiple-choice questions relating to the material in the chapter. The amount of core questions corresponds to the suggested guidelines by CSI Global Education Inc. regarding the number of questions per chapter to be included on CSC exams. These guidelines are listed below, and students should keep them in mind as they devote their time and energies to covering the materials included in the course. In other

TM The Canadian Securities Course (CSC), Canadian Securities, and the Canadian Securities Institute (CSI) are all registered trademarks of CSI Global Education Inc.

4. Two practice examinations that cover similar materials that will be included on each of the CSC exams, along with detailed solutions, have been included. Just like the actual CSC exams, these sample exams consist of 100 multiple-choice questions each. In addition, the questions per chapter fall within the CSI recommended guidelines. Each practice exam should be completed after the students have reviewed all the relevant materials and feel they are “almost” ready to write that particular exam. The exams serve two purposes:

• They provide feedback regarding areas of strength or weakness

• They help students become more comfortable with the format of the actual CSC exams.

However, students should be aware that the actual exams may vary substantially from these practice exams, since the CSI makes a conscious effort to change the actual CSC exams on a regular basis.

CSI GLOBAL EDUCATION INC. EXAM QUESTION GUIDELINES

CSI Global Education Inc. has provided the following guidelines to students regarding the approximate number of questions that will be included in the exams. While these guidelines are useful in assessing the relative importance of topics, the actual number of questions relating to a particular chapter may vary slightly from one exam to the next.

EXAM #1 (CHAPTERS 1-12)

EXAM #2 (CHAPTERS 13-23)

ABOUT THE ONLINE VERSION

In conjunction with publishing a new edition of this book, we’ve developed an online version, which you can access at www.wiley.ca/go/cse. The Canadian Securities Exam Fast-Track Online Study Guide is a subscription-based online test tool for students preparing for the Canadian Securities Exam (CSE). This online test-prep product will be based on The Canadian Securities Exam Fast-Track Study Guide and will allow students to review the guide’s modules, take review quizzes covering each module, and take complete practice exams.

Users will have the option to purchase a 1-month access period for $49.99 or a 4-month access period for $79.99. Both options provide users with full access to the product, which contains the fully searchable test of the print guide in addition to 1000 practice questions. Like the print guide, this product is the perfect resource for a “final push” to help students pass the exam.

The program is based on an easy-to-use ExamWeb online platform, and it includes a number of options that will allow users to customize the length and focus of their practice tests. Other features include:

• A diagnostic self-assessment tool that helps students identify their strengths and weaknesses

• Student-controlled quizzes and practice exams

• Access to book chapters (all textual material, including examples, chapter review questions, and two practice exams; 1000 questions)

• Additional test questions exclusive to the online platform

• Summaries of the most important topics from the CSC textbook

STUDY SUGGESTIONS

• The CSC exams are two hours in length each and consist of 100 multiple-choice questions (1.2 minutes per question). They have no essay questions and are designed to test general understanding of a variety of concepts, as well as knowledge of various specific points. It is recommended that students read over the end-of-chapter questions and practice exams included in this study guide in order to get a flavour for the types of questions and concepts that are normally tested. CSI Global Education Inc. also provides various options to obtain practice questions on their website at www.csi.ca.

• You need to get 60% or better to pass each of the exams. This means you have to get 60 questions correct. This also means you can afford to get 40 questions wrong. The message is clear — do not get discouraged when you don’t know the answer to one question or even a few questions. Remain positive and continue to work your way through the exam with a positive attitude even if you hit a few trouble spots. Maintaining this attitude is also important for your studying schedule. In other words, don’t get discouraged if you don’t feel comfortable with all of the material. Do your best and devote your greatest effort to those topics that have the highest likelihood of being on the exam.

• You are not penalized for incorrect answers, so even if you don’t know the answer or are not 100% certain, never leave a question blank! Often, even if you don’t know the answer, you may be able to eliminate one or more answers, thus increasing your odds of making an educated guess.

• Cover the relevant material in the CSC textbooks prior to reviewing the material in this study guide. The glossary in the CSC textbook provides a good summary of the major definitions and terms you should know for the exams.

• During the week prior to your scheduled writing of one of the actual CSC exams allow yourself sufficient time for a general review of all the material. You should not be seeing any materials for the first time during this week. Past experience indicates that leaving yourself adequate time to prepare during the last week is essential for passing the exam, since you are required to know a lot of material by the exam date.

• When you have completed reviewing the material, simulate actual exam conditions and try the appropriate sample examination. This will give you a feeling of how well prepared you are, where your strengths and weaknesses are, and how well you must manage your time during the actual exam. Writing practice exams and reviewing the correct answers is a great way of reviewing essential topics and simulating actual exam conditions.

• Get a good night’s rest and try not to study complex materials the night before your exam, so that your mind will be fresh. Being well rested is especially important for multiple-choice questions, which generally require a great deal of clarity in thought.

• GOOD LUCK! BE POSITIVE!

chapter 1

THE CAPITAL MARKET

CSC EXAM SUGGESTED GUIDELINES:

15 questions combined for Chapters 1 to 3

INTRODUCTION

The vital function served by financial markets is the transfer of wealth from those who have extra wealth to those who need capital. In other words, financial markets drive economic growth by transforming savings into investments.

• The three components of this process of wealth transfer are

1. financial instruments;

2. financial markets; and

3. financial intermediaries.

SUPPLIERS AND USERS OF INVESTMENT CAPITAL

Investment Capital

Capital incorporates the savings of individuals, corporations, governments, and other entities. It is scarce and valuable; however, it is only economically significant when it is properly utilized.

Capital can be utilized through

1. direct investment in real assets that generate wealth directly (e.g., land, buildings, equipment, human capital) or

2. indirect investment in financial assets (e.g., stocks, bonds, treasury bills), which allows issuers of these securities to invest funds directly in wealth generating assets.

Capital is mobile, scarce, and sensitive — efficient allocation promotes economic growth, while inefficient allocation can constrain economic growth. As a result of these characteristics, capital is selective and tends to flow toward attractive economic environments.

• Capital tends to flow in and out of countries in response to several variables such as

• the political environment;

• economic trends;

• fiscal policy;

• monetary policy;

• investment opportunities and risk-return opportunities; and

• labour force characteristics.

• The availability of capital is critical to any nation. It is necessary to promote economic output, improve productivity, encourage innovations, and in general improve the competitive position of a nation.