Csc- Chpt 1

Front 1

Capital

Back 1

Wealth- real materal (land buildings) and representational items like money, stocks and bonds
- economic value
- capital savings are usless by themselves

Front 2

capital characteristics

Back 2

- mobile
- sensitive tot he environment
- scarce

Front 3

country risk evaluation

Back 3

- potical environment
- economic trends (GDP, inflation, activity)
- fiscal policy (tax, gov spending, encouraging savings)
- monetary policy (growth on money supply)
- investment opportunities
- labour force

Front 4

government savers and di-savers

Back 4

savers: have a surplus to invest
dis savers: must borrow in capital markets to fund deficits

Front 5

Sources of Capital

Back 5

1. Retail Investors: indv investors that buy and sell securities for their own personal accounts not for a corp
2. Institutional investors: orgs, like pension or mutal fund companies that trade large volumes, stready flow of cash to invest
3. foreign investors: significant source, particular industries

Front 6

Users of capital

Back 6

individuals- finance large purchases, consumption, incur it though indebtedness (loan mortgage)
- also foreign individuals use CAN capital by borrowing from Canadian banks

-business: finanance day to day operations, renew and maintain plant and equip, expand, - funds are generated internally, some borrowed, rest raised through securities

- Government: four main instruments to fund expenditures bc revenues fail to meet expenditures --> Tbills, marketable bonds, CSBs and CPBs

Front 7

installment debenture

Back 7

principle amount of the bond expires every year
used by prov governments to pay for projects that last many years

Front 8

Financial Instruments

Back 8

(1/3 components of securities industry: financial instruments, financial markets and financial intermediaries)
- debt instruments: bonds, debentures, mortgage, tbills, commercial paper
- equity instrument:
- investment funds: most common is the open ended fund (mutal fund) - sell units and invest
- derivatives- derived from the underlying instrument, options and forwards

Front 9

private equity

Back 9

actually does encompass debt and equity, long terms are often higher but more risky
- important because it allows businesses to obtain funds when issuing to the public is basically impossible
EX: venture capital: invest in a business producing no CF, unproven technology,
MEANS: 1. leveraged buyout 2. growth capital 3. turnaround (investing in under preforming industry, need restructuring 4. early stage 5. late stage 6. distressed debt

Front 10

who are private equity investors

Back 10

public pension plan. private pp, endowments, foundations, wealthy fam/ind

Front 11

dealer markets

Back 11

- OTC (most bonds and debentures), UNLISTED MARKETS (pull from own supply), QTRS (quotation- facilities users to post, but does not match), ATS (privately owned, does match, own inventory, one less person) - IIROC REGULATES, electronic trading systems- Candeal

Front 12

auction vs deal

Back 12

auction markets are all canada's stock exchanges
dealer- negotiated market

- prices of all transactions are publicly visible in auction markets. In dealer markets, market makers post bid and ask prices but the transaction price might differ from the posted price.

Front 13

liquidity in stock exchanges

Back 13

- frequent sales
- narrow price spread
-small price fluctuations

Front 14

canada's five stock exchanges

Back 14

TSX: senoir equities and some debt that are convertible into a listed income
TSX Venture: jnr securities and a few debenture issues
CNSX: Emerging companies
Montreal: all financial and equity futures and options
ICE future: agriculture futures and options.

Front 15

What are the types of exchange ownerships?

Back 15

1) Non for profit- firm must own a seat
2) For profit- exchange is owned by shareholders (all Canadian like this)

Firms who have access to the trading facilities are known as PARTICIPATING ORGS or APPROVED PART (do not have to be shareholders

Front 16

CUB

Back 16

Canadian Unlisted Board Inc (CUB)
- in Ontario, it is required that trades on the unlisted exchanges by reported through CUB

Front 17

What are the three electronic tradings systems that have emerged in Canada for OTC/Deal markets?

Back 17

CanDeal- joint venture between the 6 largests
CBID- retail and instituional
CanPX

Front 18

ATS vs QTRS

Back 18

ATS- alternative trading systems- privately owned and computerized that match orders for securities outside exh facilities- ALSO KNOW as PETS

QTRS- are recognized stock markets that operate in a sim manner to exhanges and provide facilities to users to post quotes
- market itself does not match