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| Certification Vendor: | CSI (Canadian Securities Institute) |
|---|---|
| Exam Name: | Canadian Securities Course Examination 2 |
| Exam Number: | CSC2 |
| Real Exam Qty: | 100 |
| Related Certifications: | CSC1 CIM (Chartered Investment Manager) CPH (Conduct and Practices Handbook) |
| Available Languages: | English, French |
| Exam Price: | CAD $250 (approximately) |
| Exam Duration: | 120 minutes |
| Passing Score: | 60% |
| Certificate Validity Period: | No expiry, but must be registered within 5 years of passing |
| Exam Format: | Multiple Choice |
| Sample Questions: | CSI CSC2 Sample Questions |
| Exam Way: | Computer-based testing at Pearson VUE test centers |
| Pre Condition: | Must pass CSC1 before taking CSC2; Completion of both exams required for securities registration |
| Official Syllabus URL: | https://www.csi.ca/ |
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NEW QUESTION # 130
What is a characteristic of a growth industry?
Answer: D
Explanation:
A growth industry is expected to expand faster than the overall economy because of innovation, new demand, changing consumer behaviour, or technological development. Companies in these industries often generate above-average earnings relative to invested capital because demand is strong and expansion opportunities are significant. Option A describes a mature industry whose growth roughly tracks the broader economy. Option B may occur as competition develops, but price competition alone is not the best defining characteristic of a growth industry and may eventually pressure margins.
Option C describes a defensive or mature industry where demand remains steady regardless of economic conditions. The strongest growth-industry characteristic is that companies can earn above- average returns on invested capital due to superior growth prospects.
NEW QUESTION # 131
How does asset-backed commercial paper (ABCP) differ from mortgage-backed securities?
Answer: A
Explanation:
Asset-Backed Commercial Paper (ABCP) and Mortgage-Backed Securities (MBS) are both forms of securitized assets, but they differ in structure and purpose:
* ABCP Features:ABCP is a short-term investment backed by a pool of assets such as receivables, loans, or leases. It is designed to provide high liquidity with shorter maturities, often less than a year.
This contrasts with MBS, which typically has longer maturities tied to underlying mortgages.
* Key Differences:
* Liquidity: ABCP is highly liquid and used for short-term financing needs.
* Maturity: ABCP generally has maturities of less than a year, while MBS has longer terms.
* Risk: MBS carries additional interest rate and prepayment risks due to its mortgage backing.
* Why Other Options Are Incorrect:
* A. ABCP minimizes roll-over risk: Roll-over risk exists with ABCP, as investors may need to reinvest upon maturity.
* C. ABCP offers maturity dates of at least three years: ABCP typically has much shorter maturities.
* D. ABCP guarantees principal repayment if held to maturity: This guarantee depends on the underlying assets and is not inherent in all ABCP.
:
CSC Volume 2, Chapter 23: Securitized products including ABCP and MBS.
NEW QUESTION # 132
When acting as a principal, how do investment dealers generate revenue?
Answer: D
Explanation:
When acting as a principal, investment dealers buy and sell securities for their own account. They generate revenue by earning a spread, which is the difference between the price at which they buy securities (bid price) and the price at which they sell them (ask price). This is distinct from their role as an agent, where revenue is earned through commissions on trades executed on behalf of clients.
* A. Through commissions: Commissions are earned when acting as an agent, not as a principal.
* B. Through tracers: This term does not apply to revenue generation.
* C. Through brokerage charges: Brokerage charges relate to fees imposed on client accounts, not principal trading spreads.
Reference:CSC Volume 1, Chapter 1, "The Principal and Agency Functions of Investment Dealers" explains how spreads generate revenue in principal trades.
NEW QUESTION # 133
When a company issues a number of common shares, some of which are held by institutional investors, what are the institutional investors' shares known as?
Answer: D
Explanation:
The shares held by institutional investors, along with other shares available for trading by the public, are referred to as thepublic float shares. These are the issued shares of a company that are actively traded in the market, excluding restricted shares held by insiders or strategic investors.
Other options:
* Issued shares: Includes all shares a company has issued, including restricted shares.
* Outstanding shares: Includes all shares held by all shareholders, including restricted shares and shares not available for trading.
* Market capitalization shares: Not a term used to describe shares; market capitalization is a measure of a company's total value based on its stock price and outstanding shares.
References:
* Volume 1, Chapter 8:Equity Securities, section on "Public Float and Market Capitalization" explains the concept of public float shares.
NEW QUESTION # 134
Which will taxed at the taxpayer' marginal tax rate?
Answer: D
Explanation:
Dividends from foreign corporations are taxed at the taxpayer's marginal tax rate because they are treated as regular income in Canada. Unlike Canadian dividends, which may qualify for a dividend tax credit to reduce the effective tax rate, foreign dividends do not receive preferential tax treatment under Canadian tax law.
* Marginal Tax Rate: The rate at which the taxpayer's last dollar of income is taxed. Since foreign dividends do not qualify for tax credits, they are taxed as ordinary income.
* Double Taxation Relief: While foreign dividends are fully taxable in Canada, tax treaties between Canada and other countries may allow a foreign tax credit to offset taxes paid to the foreign jurisdiction.
However, this does not alter their treatment under the marginal tax rate.
Other options provided in the question:
* Dividends not eligible for the dividend tax credit (Option C)are usually taxed at a higher rate, but Canadian non-eligible dividends receive some preferential treatment, unlike foreign dividends.
* Foreign property valuation (Options B and D)is relevant for reporting requirements under Canadian tax laws, such as the T1135 Foreign Income Verification Statement, but does not affect the taxation of foreign dividends.
References:
* CSC Volume 2, Chapter 24: "Canadian Taxation," details the treatment of foreign income, including dividends and foreign tax credits.
NEW QUESTION # 135
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