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| Section | Weight | Objectives |
|---|---|---|
| Portfolio Construction and Investment Concepts | 10-14% | - Asset allocation and diversification principles - Investment strategies and client portfolio management - Portfolio risk and return concepts |
| Know Your Client (KYC), Know Your Product (KYP), and Suitability | 18-22% | - Client information gathering and account opening requirements - Suitability assessment and investment recommendations - Client objectives, risk tolerance, time horizon, and financial circumstances |
| Equities | 18-22% | - Equity markets, trading, and investment strategies - Risks and taxation considerations of equity investments - Equity securities characteristics and valuation |
| Fixed Income Securities | 18-22% | - Fixed income investment strategies and risks - Bond pricing, yields, duration, and interest rate risk - Fixed income products and market characteristics |
| Mutual Funds and Exchange-Traded Funds (ETFs) | 20-24% | - ETF structures, trading mechanisms, and characteristics - Fund performance evaluation and suitability considerations - Mutual fund structures, features, and fees |
| Structured Products | 10-14% | - Types and features of structured products - Benefits, risks, and suitability considerations |
1. An equity manager is tasked with building a portfolio that is expected to outperform the market over the next several years. The manager identifies companies that are reinvesting their profits to fund rapid expansion, with the expectation that these companies will experience significantly higher earnings growth compared to the market average. The manager is less concerned with the current market price relative to the company's intrinsic value, and more focused on the potential for exponential growth in revenues and earnings.
Given this scenario, which investment strategy does this approach best represent?
A) Growth investing
B) Value investing
C) Market timing
D) Sector rotation
2. What is the main driver of the intraday price of an exchange-traded fund (ETF)?
A) Supply-demand changes on the exchange
B) Fund manager's portfolio rebalancing
C) Liquidity from institutional investors
D) Daily valuation of assets under management
3. Which of the following best describes the type of market data typically provided by an equity exchange such as the Toronto Stock Exchange (TSX)?
A) Regulatory filings and continuous disclosure reports
B) Real-time trade prices, bid-ask spreads and trading volumes
C) Only historical pricing data from the previous month
D) Only end-of-day summary prices and trading volumes
4. Which of the following is a requirement under securities regulations for debt issuers in Canadian debt markets?
A) Debt issuers must provide timely disclosure of material changes
B) Debt issuers must include a detailed risk disclosure in their offering documents
C) Debt issuers must file audited annual financial statements
D) Debt issuers must maintain capital to at least the value of debt in issue
5. A retail client is 25-year-old with a stable income, a high risk profile and has a good understanding of the securities and the securities market. They wish to open an account that allows them to take responsibility for their own investment decisions and allow them to seek growth opportunities in the securities markets. Under account appropriateness rules, which seems most appropriate?
A) Order execution only (OEO) account
B) Direct electronic access (DEA) account
C) An aggressive growth mutual fund to maximize potential returns
D) A balanced mutual fund account composed of a mix of equities and bonds
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: A | Question # 3 Answer: B | Question # 4 Answer: A | Question # 5 Answer: A |
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