Canadian Securities Industry Chapter 1
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Questions and Answers

What is the primary function of a financial intermediary?

  • To provide investment advice to clients
  • To lend money directly to borrowers
  • To raise capital for investors
  • To act as a middleman between suppliers and users of capital (correct)

Who are the suppliers of capital in a financial system?

  • Entrepreneurs
  • Financial intermediaries
  • Investors (correct)
  • Borrowers

What is the role of a financial intermediary in the capital market?

  • To facilitate the flow of capital between suppliers and users (correct)
  • To provide financial advice to clients
  • To issue securities directly to investors
  • To lend money directly to borrowers

What type of financial institution is an example of a financial intermediary?

<p>Bank (A)</p> Signup and view all the answers

What is the outcome of a financial intermediary's role in the capital market?

<p>Efficient allocation of capital between suppliers and users (D)</p> Signup and view all the answers

What can a financial intermediary do to raise capital?

<p>Raise capital by bringing a new issue of securities to the financial markets (A)</p> Signup and view all the answers

What is the primary function of financial intermediaries?

<p>To facilitate the transfer of financial instruments between suppliers and users of capital (A)</p> Signup and view all the answers

Which type of investment dealer is also known as a discount broker?

<p>Self-directed broker (A)</p> Signup and view all the answers

What is the primary market distribution of a private company's first public issuance of stocks known as?

<p>Initial Public Offering (IPO) (B)</p> Signup and view all the answers

What is the role of investment dealers in the secondary market?

<p>To facilitate the trading of previously issued securities (A)</p> Signup and view all the answers

Which of the following is NOT a type of investment dealer?

<p>Credit union (A)</p> Signup and view all the answers

What is the term for an organization that facilitates the trading or movement of financial instruments?

<p>Financial intermediary (B)</p> Signup and view all the answers

What is the primary role of an investment dealer in the process of issuing stocks?

<p>To help the company issue and sell stocks to investors (D)</p> Signup and view all the answers

What do investors receive in return for transferring money to the company through an investment dealer?

<p>A share of ownership of the company (A)</p> Signup and view all the answers

What is the benefit to the company from issuing stocks and receiving investment capital?

<p>The company can reinvest the proceeds in the firm (A)</p> Signup and view all the answers

What is the outcome if the company does well following the expansion and the price of its stock rises in value?

<p>Investors will be able to sell their stocks to earn a profit (D)</p> Signup and view all the answers

What is the role of financial intermediaries in the economy?

<p>To establish efficient methods of channelling funds between lenders and borrowers (C)</p> Signup and view all the answers

Why is it important for students to stay informed about the financial markets and the industry?

<p>To become a competent and trusted participant in the securities industry (B)</p> Signup and view all the answers

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