The normal shape of a yield curve is anupward slope, indicating that longer-term bonds offer higher yields than shorter-term bonds. This reflects the additional risk and time value of money associated with longer maturities.
A. Downward slope: This could describe a yield curve during unusual circumstances, such as a period of market uncertainty or deflation.
B. Inverted: An inverted yield curve, where shorter-term yields exceed longer-term yields, is a rare occurrence and often signals economic recession.
D. Humped: A humped curve is rare and occurs when intermediate-term yields exceed both short-term and long-term yields.
[Reference:CSC Volume 1, Chapter 7, "The Yield Curve – Normal Shape" discusses the upward-sloping yield curve as the standard in normal market conditions., ]
Questions 5
Which statutory right allowsa purchaser to caned their order if a prospectus has a misrepresentation?
Theright of rescissionallows a purchaser to cancel their purchase if the prospectus contains amisrepresentation. This statutory right protects investors by ensuring that they are not bound by transactions based on incorrect or misleading information. Under Canadian securities law, the right of rescission is an important safeguard to maintain market integrity and investor confidence.
This right is distinct from theright of action for damages, which allows investors to sue for compensation, and theright of withdrawal, which permits cancellation within a limited time after agreeing to the purchase, typically two business days.
References:
Volume 1, Chapter 3:The Canadian Regulatory Environment, section on "Rights of Purchasers" describes the statutory rights related to prospectuses and their misrepresentations.
Questions 6
Where would the description da company's fixed assets normallybe found?
The description of a company's fixed assets, including details about their nature, valuation methods, and depreciation, is typically found in thenotes to the financial statements. Thesenotes provide additional context, explanations, and details about the figures presented in the financial statements. The statement of financial position will list fixed assets, but the comprehensive description is found in the notes.
References:
Volume 1, Chapter 11:Corporations and Their Financial Statements, section on "Notes to the Financial Statements" describes how notes are used to provide critical details about items in the financial statements, including fixed assets.
Questions 7
What is the main benefit for the investors when a company announces a stock spit?
Options:
A.
An increase in the shares’ affordability.
B.
An increase in the shares' market price.
C.
An increase in the value of the shareholderstake
D.
An Increase in the proportion of the shareholder’s stake.
A stock split reduces the price per share, making the shares more affordable to smaller or retail investors. This does not increase the market capitalization or shareholder value but makes trading easier by improving liquidity and accessibility.
References:
Volume 1, Chapter 8:Equity Securities, section on "Stock Splits and Consolidations," describes the purpose and benefits of stock splits for investors, particularly in terms of affordability and liquidity.
