Canadian Securities Exam Fast-Track Study Guide

Acknowledgements vi
Introduction: How to Use this Book vii
Chapter 1: The Capital Market 1
Introduction 1
Suppliers and Users of Investment Capital 1
The Role of Financial Instruments 4
Financial Markets 5
Chapter 1 Review Questions 8
Chapter 2: The Canadian Securities Industry 11
An Overview of the Canadian Securities Industry 11
The Role of Financial Intermediaries 11
The Canadian Securities Industry 12
Chartered Banks 14
Other Intermediaries 16
Chapter 2 Review Questions 18
Chapter 3: The Canadian Regulatory Environment 21
Regulatory Organizations 21
Arbitration 24
Regulation and Investor Protection 24
The Ethics of Trading 26
Takeovers and Insider Trading 28
Chapter 3 Review Questions 29
Chapter 4: Economic Principles 33
Overview of Economics 33
Measuring the Economy 34
Labour Markets 36
Interest Rates 37
Money and Inflation 38
International Economics 39
Chapter 4 Review Questions 41
Chapter 5: Economic Policy 45
Economic Theories 45
Fiscal Policy 46
Monetary Policy 46
Chapter 5 Review Questions 49
Chapter 6: Fixed-income Securities: Features and Types 53
Overview and Terminology 53
Bond Features 54
Government Securities 56
Corporate Bonds 57
Chapter 6 Review Questions 61
Chapter 7: Fixed-income Securities: Pricing and Trading 67
Bond Pricing Principles 67
The Term Structure of Interest Rates 71
Delivery, Regulation, and Settlement 72
Bond Indexes 73
Chapter 7 Review Questions 74
Chapter 8: Equity Securities: Common and Preferred Shares 79
Introduction 79
Common Shares 79
Preferred Share Characteristics 81
Stock Indices and Averages 87
Chapter 8 Review Questions 89
Chapter 9: Equity Securities: Equity Trading 95
Cash and Margin Accounts 95
Short Sales 97
Equity Transactions 98
Chapter 9 Review Questions 99
Chapter 10: Derivatives 105
Introduction 105
Options 106
Futures and Forwards 112
Rights and Warrants 115
Chapter 10 Review Questions 118
Chapter 11: Financing and Listing Securities 123
Basic Forms of Business Organization 123
The Incorporation Process 125
Government and Corporate Financing 127
The Financing Procedure 130
The Listing Process 133
Chapter 11 Review Questions 135
Chapter 12: Corporations and Their Financial Statements 139
Understanding Financial Statements 139
Statement of Financial Position 139
Statement of Comprehensive Income 143
Other Components 145
Chapter 12 Review Questions 146
Chapter 13: Fundamental and Technical Analysis 151
Overview 151
Fundamental Macroeconomic Analysis 152
Industry Analysis 153
Fundamental Valuation Models 155
Technical Analysis 158
Chapter 13 Review Questions 160
Chapter 14: Company Analysis 165
Fundamental Company Analysis 165
Interpreting Financial Statements 166
Assessing Preferred Share Investment Quality 174
Chapter 14 Review Questions 176
Chapter 15: Introduction to the Portfolio Approach 183
Introduction 183
Risk and Return 183
Portfolio Risk and Return 187
The Portfolio Management Process 189
Chapter 15 Review Questions 191
Chapter 16: The Portfolio Management Process 197
Developing an Asset Mix and Selecting Investment Styles 197
Implementing the Asset Mix 200
Monitoring the Economy, the Markets, the Portfolio, and the Client 201
Evaluating Portfolio Performance 202
Chapter 16 Review Questions 203
Chapter 17: Evolution of Managed and Structured Products 209
Managed versus Structured Products 209
Chapter 17 Review Questions 211
Chapter 18: Mutual Funds: Structure and Regulation 213
Introduction 213
The Structure of Mutual Funds 214
Labour-sponsored Venture Capital Corporations (LSVCCs) 217
Regulation of Mutual Funds 219
Chapter 18 Review Questions 223
Chapter 19: Mutual Funds: Types and Features 227
Types of Mutual Funds 227
Fund Management Styles 229
Redeeming Mutual Fund Units or Shares 229
Comparing Mutual Fund Performance 231
Chapter 19 Review Questions 233
Chapter 20: Segregated Funds and Other Insurance Products 237
Key Features of Segregated Funds 237
Maturity Guarantees and Benefits 238
Fees and Expenses 241
Tax Considerations 242
Regulation 245
Other Insurance Products 247
Chapter 20 Review Questions 247
Chapter 21: Hedge Funds 251
Overview of Hedge Funds 251
Hedge Fund Indexes 253
Benefits and Risks of Hedge Funds 253
Due Diligence 254
Hedge Fund Strategies 255
Funds of Hedge Funds 257
Chapter 21 Review Questions 257
Chapter 22: Exchange-listed Managed Products 261
Closed-end Funds 261
Income Trusts 262
Exchange-tra