CSC2 TEST DUMP - BEST CSC2 PREPARATION MATERIALS

CSC2 Test Dump - Best CSC2 Preparation Materials

CSC2 Test Dump - Best CSC2 Preparation Materials

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Because the Canadian Securities Course Exam2 (CSC2) practice exams create an environment similar to the real test for its customer so they can feel themselves in the Canadian Securities Course Exam2 (CSC2) real test center. This specification helps them to remove Canadian Securities Course Exam2 (CSC2) exam fear and attempt the final test confidently.

CSI Canadian Securities Course Exam2 Sample Questions (Q98-Q103):

NEW QUESTION # 98
Which type of trader specializes in managing block trades on behalf of institution clients?

  • A. Responsible designated trader.
  • B. Liability trader
  • C. Agency trader
  • D. Market maker

Answer: C

Explanation:
An agency trader specializes in executing large block trades for institutional clients without taking ownership of the securities. Their role is critical in facilitating liquidity and minimizing market impact during the execution of trades.
* Managing Block Trades:
* Agency traders handle large transactions on behalf of institutions like pension funds or mutual funds, ensuring the trades are completed efficiently.
* They do not use the firm's capital; instead, they act as intermediaries between the buyer and seller.
* Minimizing Market Impact:
* Large trades can significantly impact stock prices if not executed strategically. Agency traders use methods like algorithmic trading or dark pools to mitigate this impact.
* Role vs. Other Traders:
* Liability Trader: Trades using the firm's capital, assuming the risk of the position.
* Market Maker: Provides liquidity by quoting buy and sell prices.
* Responsible Designated Trader: Oversees order flow for specific securities on the exchange.
* The question specifies managing block trades for institutional clients. This matches the role of agency traders, as they focus on executing trades on behalf of clients without taking positions themselves.
Key Responsibilities of Agency Traders:Why Option B Is Correct:References from CSC Study Materials:
* Volume 2, Chapter 27: "Working with the Institutional Client," Section on Roles and Responsibilities in the Institutional Market.


NEW QUESTION # 99
What is the key objective for investors in alternative strategy funds?

  • A. To maximize risk-adjusted returns.
  • B. To match the performance of a reference index.
  • C. To achieve absolute returns
  • D. To exceed the current rate of inflation.

Answer: C

Explanation:
Alternative strategy funds aim to achieveabsolute returns, focusing on positive returns under various market conditions rather than comparing performance to a benchmark index. These strategies often include hedge funds and alternative mutual funds, using techniques like leverage, short selling, and derivatives to manage risk and enhance returns. The goal is not necessarily to outperform an index (as in option A) or match inflation rates (option D) but to deliver consistent positive returns.
References
* CSC Volume 2, Chapter 21:Alternative Investments: Strategies and Performance, p. 21-3 to 21-24.


NEW QUESTION # 100
When acting as a principal, how do investment dealers generate revenue?

  • A. Thrown tracers.
  • B. Through commissions
  • C. Through spreads on buy/sell prices.
  • D. Through brokerage changes.

Answer: C

Explanation:
When acting as aprincipal, investment dealers buy and sell securities for their own account. They generate revenue by earning aspread, which is the difference between the price at whichthey buy securities (bid price) and the price at which they sell them (ask price). This is distinct from their role as an agent, where revenue is earned through commissions on trades executed on behalf of clients.
* A. Through commissions: Commissions are earned when acting as an agent, not as a principal.
* B. Through tracers: This term does not apply to revenue generation.
* C. Through brokerage charges: Brokerage charges relate to fees imposed on client accounts, not principal trading spreads.


NEW QUESTION # 101
How can an analyst use trend analysis to analyze a company's financial statements?

  • A. Analyze the ratios against companies in a wide a range of industries to see how the company is trending in the current economic cycle.
  • B. Identity trends by selecting the lowest ratio for the base year, even if a loss is experienced, as it represents a good starting point for analyzing the growth in the ratios.
  • C. Review the company's ratio over the past year, as they provide the best estimate of near-term performance and future trends.
  • D. Computer the company's current ratios with its ratios from prior years to determine a trend.

Answer: D

Explanation:
Trend analysisinvolves comparing a company's financial ratios or metrics over several periods to identify patterns or changes that may indicate performance trends. This approach is essential for evaluating a company's financial health over time and detecting improvements or declines in critical financial metrics.
By analyzing thecurrent ratios-which measure liquidity and the company's ability to cover short-term obligations-with data from prior years, an analyst can determine trends such asincreasing efficiency, solvency, or potential financial stress. This method provides meaningful insights into a company's financial trajectory, supporting better decision-making.
Option B and C are incorrect because they either limit the analysis to a short timeframe or ignore the significance of using a stable and representative base year. Option D deviates from the principle of selecting relevant industry peers.
References:
* Volume 2, Chapter 14: Company Analysis, Trend Analysis,Canadian Securities Course.


NEW QUESTION # 102
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 # 103
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