Deck 18: The Financial Services Industry in Canada

Question 1

Within the area of securities regulation,for many years,the federal government has been working on what?

A)the creation of a national securities regulator
B)closing down smaller brokerage houses
C)improving the image of the stock market
D)merging the primary and secondary markets

Answer 1

A

Question 2

It is mainly through the that the Bank of Canada's key policy rate influences interest rates and the exchange rate.

A)stock brokers
B)overnight rate
C)prime lending rate
D)financial markets

Answer 2

D

Question 3

For investors who desire low risks and guaranteed income,are a secure investment.

A)corporate bonds
B)government bonds
C)penny stocks
D)growth stocks

Answer 3

B

Question 4

Darlene Law has enough money to purchase 1,000 shares of stock in ABC Corporation.If she buys on margin,she can purchase an additional 1,000 shares.What is the margin?

A)60 percent
B)70 percent
C)50 percent
D)40 percent

Question 5

Which of the following is an income stock?

A)a public utility stock
B)an oil exploration stock
C)a natural gas stock
D)a biotechnology stock

Question 6

Which of the following is a growth stock?

A)a natural gas stock
B)a biotechnology stock
C)an oil exploration stock
D)a public utility stock

Question 7

A financial institution that is owned by its depositors is called a(n):

A)credit union.
B)insurance company.
C)savings and loan association.
D)common stock bank.

Question 8

A market that is declining is known as what?

A)an oversold market
B)a bear market
C)an overconfident market
D)a bull market

Question 9

The regulations in the financial services sector are time consuming and costly to complete because:

A)this sector has been very slow to implement technological improvements.
B)these regulations are designed to protect investors.
C)the regulators are trying to justify their existence.
D)there are numerous sets of regulations that exist,and no one is sure which set represents the rules that are currently in force.

Question 10

Canada's largest bank in terms of total assets is:

A)CIBC.
B)Scotiabank.
C)Royal Bank of Canada.
D)Toronto Dominion Bank.

Question 11

The interest rate that the Bank of Canada charges for loans to chartered banks is called the:

A)margin requirement.
B)overnight rate.
C)reserve requirement.
D)prime rate.

Question 12

Tangerine is an example of what?

A)a pension fund
B)an insurance company
C)a credit union
D)an Internet bank

Question 13

Canada's "four pillar" system included banks,trust companies,insurance companies,and ______.

A)savings and loan associations
B)pension funds
C)credit unions
D)securities dealers

Question 14

During periods of high inflation,money loses which essential characteristic?

A)Stability
B)Durability
C)Portability
D)Divisibility

Question 15

If the Bank of Canada wished to increase economic activity,it would be likely to:

A)increase the prime rate.
B)increase the overnight rate.
C)sell government securities.
D)decrease the overnight rate.

Question 16

The board of directors for Ballard Energy Systems declared a two for one stock split.If Sally owned 400 shares before the split,how many shares does she own after the split?

A)400
B)800
C)600
D)200

Question 17

Where can an investor find information on the investment risk of a particular bond issue?

A)through the Financial Post
B)through Moody's Investors Service
C)through MSN Money
D)through the Dow Jones

Question 18

An organization whose members can meet to buy and sell securities is called:

A)a commodities exchange.
B)a stock exchange.
C)a brokerage house.
D)the Ontario Securities Commission.

Question 19

The positive difference between the price at which an investor buys a stock and the price they sell it for is known as _.

A)a limit order
B)a capital gain
C)a bull market
D)a price option

Question 20

The reason for choosing to invest in an index is:

A)the rates of return earned from the index are no worse than what can be earned by picking specific stocks.
B)you have a lot of expertise when it comes to investing in an index.
C)you want to concentrate your investments in a particular industry.
D)you get to choose which specific company stocks to buy.

Question 21

A government agency that administers provincial securities legislation is known as what?

A)a securities commission
B)a commodities exchange
C)a regional exchange
D)a futures market

Question 22

The type of investment that combines and invests the money of many individual investors under the guidance of professional managers is called a:

A)prospectus.
B)mutual fund.
C)securities exchange.
D)GIC account.

Question 23

The financial system includes financial institutions,the financial markets,and _.

A)clearing and settlements systems
B)pension funds
C)credit unions
D)banks

Question 24

Judy Martin,owner of Judy's Fashions,received a $12,000 tax refund.She deposited the money in the Toronto Dominion Bank.The terms of the agreement are that she must leave the money on deposit for three years and the bank will pay her 3 percent interest.Her account is a(n):

A)certificate of deposit.
B)foreign currency deposit.
C)chequing account.
D)RRSP.

Question 25

If the bank of Canada took some of the money out of the economy,which of the following may occur?

A)inflation
B)deflation
C)recession
D)falling dollar value

Question 26

An advantage of online brokers compared to traditional stockbrokers is what?

A)lower fees
B)access to the secondary market
C)more investment research
D)help in making financial decisions

Question 27

Who controls monetary policy in Canada?

A)the political party in the leadership position
B)the six major banks in Canada
C)the Ontario Securities Commission
D)the Bank of Canada

Question 28

Credit union members usually are:

A)Companies that specialize in credit card offerings.
B)those who live in a particular community.
C)depositors who buy membership.
D)employees of a particular professional company or organization.

Question 29

Financial advisors are highly likely to recommend an investment in exchange traded funds (ETFs)for what type of investor?

A)a first time investor
B)an investor who has an extensive portfolio of investments in bonds and stocks
C)an investor who was previously a stock broker
D)an investor with experience in direct investments in stocks

Question 30

An increase in interest rates can the prices of bonds,stocks,and houses.

A)decrease
B)not affect
C)keep steady
D)increase

Question 31

Spreading the risk of investing over several different types of investments is known as what?

A)growth investing
B)being bullish on the stock market
C)diversification
D)value investing

Question 32

An investor who believes that stock prices will rise is called what?

A)blue-chip investor
B)penny stock investor
C)bull
D)bear

Question 33

Ralph bought 100 shares of IBM stock on margin.At the time he made his purchase,which amounted to $10,000,the margin requirement was 60 percent.How much of the purchase amount could Ralph borrow?

A)$5,000
B)$10,000
C)$4,000
D)$6,000

Question 34

Banks differ from trust companies in that trust companies have what?

A)private ownership
B)lower savings rates
C)a non-profit status
D)a fiduciary role

Question 35

When the economy is strong,the demand for dollars is _.

A)linked to interest rate deposits
B)low
C)steady
D)high

Question 36

A business that collects premiums from policyholders and then often provides long-term financing for real estate development projects is a(n):

A)commercial bank.
B)crown corporation.
C)credit union.
D)insurance company.

Question 37

Anything accepted by a society to purchase goods and services or resources is called:

A)cash.
B)barter.
C)capital.
D)money.

Question 38

Stan Donalds,president of Covell Corporation,requested that ten shares of his XYZ stock be sold at a price equal to or better than $70.Stan placed a(n)order with his broker.

A)account
B)structured
C)market
D)executive

Question 39

When the amount of goods and services that you can buy with a dollar goes up,what condition do you have?

A)monetary policy failure
B)a lower overnight rate
C)a rising dollar
D)a falling dollar

Question 40

The largest Canadian index is the _.

A)Dow Jones Industrial Average
B)TSE 60 Index
C)S&P/TSX Composite Index
D)Standard and Poor's 500 Index

Question 41

A bond selling at a price above its face value is selling at:

A)a quote.
B)a premium.
C)a par value.
D)dollars and cents.

Question 42

The function of the CDIC (Canada Deposit Insurance Corporation)is to:

A)provide a depository for surplus cash held by chartered banks.
B)provide life insurance for all Canadians.
C)insure individual deposits in banks and trust companies.
D)to insure safety deposit boxes.

Question 43

The market is a market in which an investor purchases financial securities (via an investment bank or other representative)with the proceeds going to the investor selling the stock,not to the corporation whose stocks are sold.

A)secondary
B)broker's
C)primary
D)over-the-counter

Question 44

Which of the following is NOT a function of financial markets?

A)setting interest rates
B)raising all forms of capital for new and expanding businesses
C)creating markets by trading on their own accounts
D)providing financial advice to investors and executing trades on their behalf

Question 45

A bond selling above its face value is known as what?

A)priced at par value
B)priced at a discount to par value
C)priced at a discount
D)priced at a premium

Question 46

Which of the following would not be included in the M1++ definition of money?

A)personal cheques
B)term deposits
C)paper currency
D)coins

Question 47

Banks distribute a good portion of their income to _.

A)shareholders
B)managers
C)customers
D)CEOs

Question 48

All of the following are functions of the Bank of Canada except to:

A)control inflation.
B)control and inspect Canadian currency.
C)set the bank rate.
D)insure bank depositors' deposits against bank failure.

Question 49

A system of exchange in which goods and services are traded directly for other goods and services is called a(n)system.

A)mercantile
B)exchange
C)barter
D)monetary

Question 50

An individual who pays no commission every time he or she invests in a mutual fund is investing in a(n)fund.

A)open-end
B)load
C)closed-end
D)no-load

Question 51

A network of stockbrokers who buy and sell the securities of corporations that are on a securities exchange is called:

A)a stock exchange.
B)a futures market.
C)a regional exchange.
D)the over-the-counter market.

Question 52

A detailed written description of a new security,the issuing corporation,and the corporation's top management is called a(n):

A)stock issue.
B)investor's analysis.
C)prospectus.
D)annual report.

Question 53

The responsibility for insuring deposits against bank failures is held by:

A)the Bank of Canada.
B)the Canadian Treasury Board.
C)the elected officials of the Canadian government.
D)the Canadian Deposit Insurance Corporation.

Question 54

When an investor sets a maximum price a broker can spend per share or a minimum price to accept when selling a stock,the investor is issuing a:

A)limit order.
B)market order.
C)discretionary order.
D)price option.

Question 55

When the prime rate is high:

A)there is more money for banks to lend.
B)there is an increase in the overall money supply.
C)there is an economic slowdown.
D)there is increased economic activity.

Question 56

Who monitors the day-to-day operations of financial institutions with respect to their financial soundness?

A)CDIC
B)OSC
C)OFSI
D)the Bank of Canada

Question 57

A stock's trading during the day is known as what?

A)dividend yield
B)day trading
C)P/E ratio
D)intraday trading

Question 58

The CDIC insures all accounts in each member bank for up to per depositor.

A)$40,000
B)$60,000
C)$20,000
D)$100,000

Question 59

Kelly will give a report in her college economics class on money as a medium of exchange.The title of her paper is "Money: It Doesn't Disintegrate When Handled or Melt in the Sun." Which of the five essential elements of money will she talk most about?

A)Portability
B)Divisibility
C)Stability
D)Durability

Question 60

When the Bank of Canada lowers the bank rate:

A)money cannot be obtained.
B)lending stops.
C)money is harder to obtain.
D)money is easier to obtain.

Question 61

A preauthorized electronic payment is known as what?

A)a debit
B)a smart card
C)a credit
D)a direct payment

Question 62

A firm that trades securities for its clients is called a(n):

A)securities dealer.
B)agent.
C)financial planner.
D)financial advisor.

Question 63

A negotiable financial instrument that represents some type of financial value is known as a .

A)stock
B)bond
C)prospectus
D)security

Question 64

Younger investors typically look for over time.

A)income
B)more investment advice
C)tax advantages
D)growth in value

Question 65

Exchange traded funds resemble both stocks and what other type of investment?

A)bonds
B)common shares
C)mutual funds
D)preferred shares of utilities

Question 66

Typically an order with a stockbroker can be confirmed how quickly?

A)by the next day
B)the same day
C)in minutes
D)in seconds

Question 67

Marston Manufacturing is going to sell $75 million of common stocks.In this situation,the firm will need the services of:

A)a commercial bank.
B)a savings and loan association.
C)a securities dealer.
D)the Canadian government.

Question 68

Like other businesses,a commercial bank's primary mission is to:

A)store money.
B)give financial advice.
C)supply money.
D)earn a profit.

Question 69

A machine that provides almost any service a human teller can provide is called a(n):

A)EFT
B)POS
C)ACH
D)ATM

Question 70

The sale of new securities are handled by _.

A)primary markets
B)secondary markets
C)a regional exchange
D)a futures market

Question 71

The Bank of Canada is responsible for the oversight of the financial market infrastructure under what Act?

A)The Bank of Canada Act
B)The Securities Act
C)The Payment Clearing and Settlement Act
D)The Bank Act

Question 72

One method the Bank of Canada uses to slow the economy is to:

A)raise the overnight rate.
B)raise the prime rate.
C)lower the overnight rate.
D)sell government bonds to banks and other businesses.

Question 73

Most financial advisers recommend buying for small or beginning investors.

A)bonds
B)common shares
C)preferred shares
D)mutual funds

Question 74

A measure of a stock's degree of risk is its .

A)alpha
B)sigma
C)gamma
D)beta

Question 75

A registered representative who works as a market intermediary to buy and sell securities for clients is known as what?

A)a market regulator
B)a day trader
C)a stockbroker
D)a market broker

Question 76

handles the trading of securities between investors,with the proceeds of the sale going to the investor selling the stock,not to the company whose stock is sold.

A)Primary market
B)Secondary market
C)Regional exchange
D)Futures market

Question 77

Contributions to pension funds come from whom?

A)government
B)employers
C)both employees and employers
D)employees

Question 78

A request that a stock be purchased or sold at the current market price is called a:

A)limit order.
B)margin order.
C)market order.
D)spot trade.

Question 79

Which of the following would be considered to be the safest investment?

A)blue-chip stocks.
B)penny stocks.
C)income stocks.
D)growth stocks.

Question 80

In order to purchase a new sweater,Mike Evans pulled his bank card through a magnetic card reader and entered his personal identification number.He is using a(n):

A)bill payment by telephone.
B)point-of-sale terminal.
C)automated teller machine.
D)automated clearinghouse.