Canadian Securities Industry Chapter 1

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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?

Bank (A) Signup and view all the answers

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

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

What can a financial intermediary do to raise capital?

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

What is the primary function of financial intermediaries?

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

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

Self-directed broker (A) Signup and view all the answers

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

Initial Public Offering (IPO) (B) Signup and view all the answers

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

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

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

Credit union (A) Signup and view all the answers

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

Financial intermediary (B) Signup and view all the answers

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

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

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

A share of ownership of the company (A) Signup and view all the answers

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

The company can reinvest the proceeds in the firm (A) 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?

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

What is the role of financial intermediaries in the economy?

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

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

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