CSC Level 1 Exam Prep
Practice Test

A. To coordinate and harmonize securities regulation across provincial and territorial regulators ✓

B. To directly regulate mutual fund dealers across Canada

C. To set monetary policy in consultation with the Bank of Canada

D. To insure investors against losses from market downturns

Correct — A. The CSA is an umbrella organization of provincial and territorial securities regulators whose primary mandate is to coordinate and harmonize securities regulation across Canada. It does not itself have direct regulatory power but facilitates national instruments and policies adopted by each jurisdiction.

A. It remains at $1,000 because the coupon is fixed

B. It falls below $1,000 because new bonds offer higher yields ✓

C. It rises above $1,000 because coupons become more attractive

D. It rises to reflect the increased creditworthiness of the issuer

Correct — B. Bond prices and interest rates move inversely. When market rates rise above the bond's coupon rate, the bond's fixed payments are less attractive than newly issued bonds, so its price falls below par to compensate buyers with a higher effective yield.

A. Seasonal unemployment

B. Cyclical unemployment

C. Structural unemployment

D. Frictional unemployment ✓

Correct — D. Frictional unemployment arises from the time lag between leaving one job and starting another. It is considered a normal and temporary feature of a healthy labour market as workers seek better matches.

A. Purchase securities from financial institutions with an agreement to resell next day, thereby injecting liquidity into the overnight market ✓

B. Sell government securities to drain liquidity from the overnight market

C. Set the prime rate charged by chartered banks to corporate clients

D. Intervene in foreign exchange markets to support the Canadian dollar

Correct — A. An SPRA allows the Bank of Canada to temporarily inject funds into the overnight lending market by purchasing government securities with an agreement to resell them the following business day, typically at the target overnight rate.

A. $4,000 ✓

B. $2,000

C. $8,000

D. $1,600

Correct — A. Total purchase value = 200 x $40 = $8,000. With a 50% initial margin requirement, the investor must deposit 50% x $8,000 = $4,000 in equity, borrowing the remainder from the broker.

A. Market losses resulting from poor investment performance

B. Losses caused by unsuitable investment recommendations by an advisor

C. Property held by a member firm that becomes insolvent and is missing from client accounts ✓

D. Issuer insolvency causing the value of securities to fall to zero

Correct — C. CIPF protects eligible clients if a member firm becomes insolvent and client property is missing from accounts. It does not cover market losses, unsuitable advice, or issuer insolvency.

A. T-Bills are sold at par and redeemed at a discount

B. T-Bills are sold at a discount to face value and mature at face value ✓

C. T-Bills pay semi-annual coupon interest like bonds

D. T-Bills have maturities longer than one year

Correct — B. T-Bills are short-term government securities with maturities of up to one year. They are sold at a discount to face value and redeemed at full face value at maturity; the difference represents the investor's return.

A. The distribution qualifies under a recognized exemption such as the accredited investor or minimum amount investment exemption ✓

B. The securities are sold exclusively to retail investors who hold them for at least one year

C. The issuer has been a reporting issuer for more than five continuous years

D. The issuer files an annual information form as a substitute disclosure document

Correct — A. National Instrument 45-106 provides prospectus exemptions (e.g., accredited investor exemption, minimum amount investment exemption) that allow issuers to raise capital without a prospectus, provided the offering meets specific conditions.