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CSI CSC2 Exam Syllabus Topics:
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CSI Canadian Securities Course Exam2 Sample Questions (Q78-Q83):
NEW QUESTION # 78
Based on market capitalization. which sector of the SSP.'TSX Composite index has one of the highest weightings within the index?
- A. Energy
- B. Health care
- C. Utilities
- D. Information technology
Answer: A
Explanation:
TheEnergy sectoris one of the highest-weighted sectors in theS&P/TSX Composite Indexbased on market capitalization. This reflects Canada's resource-rich economy, where energy companies, including oil, gas, and related services, make up a significant portion of the market.
Other options:
* Health care: A relatively small portion of the index.
* Utilities: Have a smaller weight compared to energy.
* Information technology: While growing, it has not surpassed energy in weight within the Canadian market.
References:
* Volume 1, Chapter 8:Equity Securities, section on "Canadian Market Indexes" outlines the composition and sectoral weightings of the S&P/TSX Composite Index.
NEW QUESTION # 79
An investor has earned additional Income and is looking to invest in a security that guarantees returns over.
The next seven years. What is the Best option for purchase?
- A. Proffered shares
- B. Provincial saving bond
- C. Common shares
- D. Exchange-traded fund.
Answer: B
Explanation:
Provincial savings bonds are a suitable option for an investor seeking a guaranteed return over a fixed period, such as seven years. These bonds are backed by the credit of the issuing provincial government and provide a stable and secure investment, ensuring predictable returns. They are often issued during specific sales campaigns and offer safety comparable to federal bonds but tailored to provincial residents.
Other options:
* Preferred shares: Provide fixed dividends but do not guarantee returns.
* Common shares: Subject to market risk and do not offer guaranteed returns.
* Exchange-traded funds (ETFs): Can track bonds or equities but are subject to market fluctuations and do not guarantee returns.
References:
* Volume 1, Chapter 6:Fixed-Income Securities, section on "Provincial and Municipal Bonds" explains the features and security of provincial savings bonds.
NEW QUESTION # 80
What is the primary difference between industry standards and industry ratios?
- A. Industry standards provide a consistent benchmark over time, while industry ratios change each year.
- B. Industry standards are presented as specific numbers, while industry ratios are presented as a range.
- C. Comparing against industry standards provides more fair and thorough analysis results rather than comparing against the average of the industry.
- D. Industry standards change each year, while industry ratios remain relatively static.
Answer: B
NEW QUESTION # 81
What is a key characteristic of an actively managed product that might interest an investor?
- A. Potential to outperform the market.
- B. Low fees.
- C. Assumes only systematic risk.
- D. Access to money at any time.
Answer: A
NEW QUESTION # 82
What is the main pitfall of closet indexing for investors?
- A. passively management fund can be marketed as actively managed.
- B. Investors must take greater risks due to a high portfolio beta.
- C. The portfolio does not closely resemble the benchmark index.
- D. High portfolio turnover makes it unsuitable for taxable accounts
Answer: A
Explanation:
Closet indexing is a controversial practice where a fund manager claims to actively manage a portfolio but instead mirrors an index closely. This practice undermines the very premise of active management.
* Lack of Value Addition: Investors pay higher fees for active management without receiving the expected benefits, as the portfolio closely tracks a benchmark index.
* Deceptive Marketing: Funds marketed as actively managed may mislead investors, violating transparency principles.
* Limited Alpha Generation: Since the portfolio resembles an index, it often fails to deliver excess returns ("alpha"), defeating the purpose of active management.
* Regulatory Concerns: Closet indexing raises ethical questions and can lead to scrutiny by regulatory bodies.
Main Pitfalls of Closet IndexingWhy C is CorrectOption C highlights the core issue of closet indexing- misrepresenting a passively managed portfolio as active, leading to higher fees without the commensurate effort or performance.
References:
* Volume 2, Section 18: Mutual Funds-Indexing and Closet Indexing.
* Volume 2, Section 13: Portfolio Manager Styles-Active vs. Passive Management.
NEW QUESTION # 83
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