Montréal Exchange Overview

Podcast Beta

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following is considered the first line of business in the insurance industry?

Health and disability insurance

Property and casualty insurance

Auto insurance

Life insurance (correct)

What is primarily evaluated during the underwriting process in the insurance business?

Client satisfaction

Investment opportunities

Insurance regulatory compliance

Risk and contractual responsibility (correct)

Which insurance product is exclusively offered by life insurance companies according to federal legislation?

Auto insurance

Health insurance

Property insurance

Annuities (correct)

According to the Insurance Bureau of Canada, which type of insurance generates the largest aggregate premiums in property and casualty insurance?

Automobile insurance Signup and view all the answers

What is primarily facilitated by financial intermediaries in the securities industry?

The transfer of capital from suppliers to users Signup and view all the answers

What is the primary purpose of reinsurance in the insurance industry?

To exchange risk between insurance companies Signup and view all the answers

Which market involves the trading of existing securities rather than new issues?

Secondary market Signup and view all the answers

What is a characteristic of institutional investors in the securities industry?

They operate mainly in unlisted markets. Signup and view all the answers

Which financial intermediaries are prohibited from selling insurance directly through their branch networks?

Schedule I banks Signup and view all the answers

What are equity securities primarily composed of?

Common shares and preferred shares Signup and view all the answers

What aspect of the insurance business is regarded as the most important in Canada?

Underwriting Signup and view all the answers

What type of insurance does NOT fall under property and casualty insurance?

Health and disability insurance Signup and view all the answers

In the context of capital markets, what does the term 'retail investor' refer to?

A small individual investor engaging independently Signup and view all the answers

Which legislation governs the operations of insurance companies in Canada?

Insurance Companies Act Signup and view all the answers

What is the primary function of the primary market?

To facilitate the issuance of new equity and debt Signup and view all the answers

Which of the following banks is NOT one of Canada's Big Six Banks?

Bank of Nova Scotia Signup and view all the answers

What percentage of voting shares can a single shareholder own in a medium-sized Schedule I bank?

65% Signup and view all the answers

Which of the following best describes the Toronto Stock Exchange?

A regulated stock exchange for trading equity securities Signup and view all the answers

Which of the following is NOT a component of life insurance?

Time-limited life insurance Signup and view all the answers

What distinguishes a preferred share from a common share?

Preferred shares generally provide fixed dividends before common shares receive any. Signup and view all the answers

Which of the following services is typically offered by Canadian banks?

Wealth management Signup and view all the answers

What type of market is characterized by trading securities that are not listed on a formal exchange?

OTC market Signup and view all the answers

What is the primary purpose of the Canada Deposit Insurance Corporation (CDIC)?

To insure savings deposits Signup and view all the answers

What is a key characteristic of voting shares in Canada's Schedule I banks?

Control of any single shareholder is limited to 20% Signup and view all the answers

Which of the following statements about Canadian bank regulation is accurate?

Small banks do not have share ownership restrictions Signup and view all the answers

How do Canada's Big Six banks primarily centralize savings?

By establishing thousands of retail branches Signup and view all the answers

Which of the following is a legislative requirement for banks regarding customer information sharing?

They cannot share information without customer consent Signup and view all the answers

What distinguishes large Schedule I banks from medium-sized banks in terms of shareholder control?

Large banks are limited to 20% control by any single group Signup and view all the answers

What is the primary factor that influences the movement of capital across borders?

Anticipation of changes to taxation and risk-adjusted returns Signup and view all the answers

Which of the following best describes the role of savings in capital supply?

Savings serve as the only source of capital available for investment. Signup and view all the answers

What impact does deficient capital investment have on an economy?

Leads to higher unemployment and declining living standards. Signup and view all the answers

How does the compensation to postpone current consumption influence individual savings behavior?

High compensation increases the tendency to save for future spending. Signup and view all the answers

Which of the following factors does NOT play a role in determining the flow of capital?

Current interest rates on savings accounts Signup and view all the answers

What contributes to a skilled and productive labor force in relation to capital investment?

Significant capital investment in education and training Signup and view all the answers

To what extent does monetary policy focus on managing the money supply?

It also includes maintaining price and foreign exchange stability. Signup and view all the answers

Which of the following is a consequence of high taxes on capital movement?

Increased movement of capital towards countries with lower taxes. Signup and view all the answers

What is the relationship between risk, return, and capital movement?

Investors prefer locations that offer the highest risk-adjusted returns. Signup and view all the answers

What is a likely behavior of investors when there is an increase in tax incentives?

They will likely increase their savings and investments. Signup and view all the answers

What is a requirement for alternative trading systems (ATS) in Ontario?

They must be registered as an investment dealer and a member of CIRO. Signup and view all the answers

Which of the following is NOT a function that alternative trading systems can perform?

Listing securities for trading. Signup and view all the answers

What distinguishes CanDeal in the fixed-income electronic trading market in Canada?

It provides access to government securities and money market instruments. Signup and view all the answers

Which statement about the Canadian Securities Administrators' stance on ATSs is accurate?

ATSs are allowed to compete with recognized exchanges and other ATSs. Signup and view all the answers

What is a common characteristic of both traditional exchanges and ATSs?

Both provide similar trading services. Signup and view all the answers

What is a key limitation of ATSs compared to traditional exchanges?

ATSs cannot list securities but can trade those listed on traditional exchanges. Signup and view all the answers

Study Notes

Introduction to the Securities Industry

The securities industry is crucial for sustaining and enhancing the Canadian economy, adapting to investors' domestic and international needs.
Key components include financial intermediaries, financial markets, and financial instruments, facilitating the transfer of capital from suppliers to users.

Investment Capital

Over 30 domestic Schedule I banks operate in Canada, with "Big Six" banks leading in asset size: BMO, CIBC, National Bank, RBC, Scotiabank, and TD Bank Group.
Schedule I banks attract savings through extensive branch networks and ATMs, allowing for a centralized savings system.

Bank Regulations

Voting shares in large Schedule I banks must be widely held, restricting single shareholder control to 20%.
Medium-sized banks can have a single shareholder own up to 65% of voting shares, while small banks can be fully owned by one entity.

Banking Products and Services

Canadian banks provide diverse services including mortgages, loans, accounts, investments, financial planning, and wealth management.
Savings deposits are insured by the Canada Deposit Insurance Corporation (CDIC).

Insurance Industry

Life insurance companies must cautiously manage investments to meet contractual obligations for policyholders.
Property and casualty insurance protects against loss of home, auto, and commercial business, with automobile insurance generating the largest premiums.

Regulatory Framework

The Insurance Companies Act governs insurance companies, permitting certain financial activities while restricting others, such as in-house trust services.
Life insurance companies uniquely offer annuities and segregated funds.

Alternative Financial Intermediaries

Various financial intermediaries, alongside banks, facilitate an effective financial services landscape in Canada.
Monetary and fiscal policies significantly influence investment opportunities and capital management.

Supply and Demand for Capital

An adequate supply of capital is essential for expanding manufacturing, enhancing productivity, and improving living standards.
Capital supply primarily comes from individual and collective savings, which can be influenced by incentives like tax breaks.

Alternative Trading Systems (ATS)

ATSs are electronic marketplaces that execute trades autonomously in equity and fixed-income markets, competing with traditional exchanges.
ATSs must register as investment dealers and comply with Canadian regulatory standards; however, they cannot list securities.

Fixed-Income Trading Markets

Canada houses several fixed-income electronic trading systems, such as CanDeal and CBID, facilitating trading in government securities and money market instruments.
CanDeal, a joint venture of the six largest bank-owned investment dealers, operates under the TMX Group and serves institutional investors.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on the Montréal Exchange and its various components, such as over-the-counter markets, preferred shares, and different types of investors. This quiz will cover essential terms and concepts relevant to trading and investment markets in Canada.