CSC1 Exam Dumps - Canadian Securities Course Exam 1

When an investor feels unfairly treated by a stockbroker, and the issue is not resolved through direct discussion with the member firm, the next step often involves pursuing a formal dispute resolution mechanism. The options available in the Canadian securities industry for handling such disputes include:

Rescission of the objectionable trades:

This would involve canceling or reversing the trades in question. However, rescission is rarely granted and typically occurs only if there is clear evidence of fraud or legal impropriety. It is not the best initial course of action for dispute resolution.

Payment from the Canadian Investor Protection Fund (CIPF):

The CIPF protects clients of member firms in the event of the firm’s insolvency, not disputes over trades or treatment by a broker. Therefore, this is not applicable in this case.

Independent arbitration:

Arbitration is a widely recognized method of resolving disputes in the securities industry. It involves an independent arbitrator reviewing the case and issuing a binding decision. It is particularly suitable for cases where discussions between the investor and the firm have not resolved the issue.

Investigation by the Ombudsman for Banking Services and Investments (OBSI):

OBSI offers a dispute resolution service for clients of financial institutions, including investment dealers. However, OBSI’s findings are non-binding, meaning they cannot compel the member firm to act or pay compensation. Arbitration, on the other hand, provides a binding resolution.

Why Arbitration is the Best Option:

Independent arbitration is a more definitive course of action because it results in a binding decision that both the investor and the broker must adhere to. Arbitration is designed to handle precisely the type of disputes described in the question and ensures a fair process overseen by an impartial third party.

References:

Canadian Securities Course Volume 1:

Section on Dispute Resolution and Investor Protection: Arbitration is discussed as a key method for resolving disputes where the investor seeks a binding resolution​.

Role of the Canadian Investor Protection Fund: The CIPF is explained as providing coverage for insolvency, not dispute resolution​.

Role of the Ombudsman for Banking Services and Investments (OBSI): OBSI is explained as offering non-binding recommendations, making it less suitable for cases where binding decisions are needed​.

Investment advisors (IAs) are required to record the names and addresses of all individuals who have requested and received a preliminary prospectus. This ensures compliance with securities regulations and provides a record for follow-ups and potential disclosures related to the offering.

A. The IA must ensure a proxy is mailed: Proxy voting is related to shareholder meetings, not the prospectus distribution.

B. The IA must provide a greensheet: A greensheet is used internally by investment firms, not distributed to clients.

C. The IA must make a tombstone advertisement: Tombstone advertisements are created by the issuer, not the IA.

Frictional unemployment arises from normal labor market activities, such as people transitioning between jobs, entering or re-entering the workforce, or temporarily being unemployed after completing education. This type of unemployment is always present, even in a healthy economy, and reflects short-term gaps in employment rather than structural or economic downturns.

Natural unemployment (Option A):Refers to the combination of frictional and structural unemployment present in an efficient economy.

Structural unemployment (Option B):Caused by mismatches between skills workers possess and those needed by employers, often due to technological advances.

Cyclical unemployment (Option C):Linked to economic recessions or downturns where demand for labor decreases.

A market order executes immediately at the best availableask pricefor a purchase transaction. In this case, the bid/ask initially was $10.25/$10.75. However, before execution, the ask price updated to $10.70, meaning Anwar will pay $10.70 per share.

B. $10.75: This was the previous ask price but is no longer valid after the update.

C. $10.29: This value is not relevant to the current bid/ask spread.

D. $10.20: This represents the updated bid price, which applies to sell orders, not buy orders.

Profit from a short sale is calculated as the difference between the selling price and the covering price, multiplied by the number of shares:

Profit=(12.75−10.15)×1,500=2.60×1,500=3,900\text{Profit} = (12.75 - 10.15) \times 1,500 = 2.60 \times 1,500 = 3,900Profit=(12.75−10.15)×1,500=2.60×1,500=3,900

References:Volume 1, Chapter 9 ("Short Selling")​.

The federal government borrows from the capital markets to cover budget deficits, which occur when government spending exceeds its revenues. Borrowing is done through the issuance of fixed-income securities such as Treasury bills, bonds, and notes. This process enables the government to fund public services, programs, and infrastructure projects without immediately raising taxes.

A. To raise capital for streets, sewers, and waterworks: While such projects are funded by borrowing, they are typically under the purview of municipal or provincial governments rather than the federal government.

B. To support the capital markets: This is an indirect result but not the primary reason for borrowing.

D. To support the expansion of corporations: Corporate expansion is financed through private or corporate capital markets, not federal borrowing.