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| Section | Weight | Objectives |
|---|---|---|
| Scope of client relationships | 15% | - Suitability determination requirements for retail clients - Requirements for working with clients in the United States and other foreign jurisdictions - Typical services provided by retail Investment Dealers - Product due diligence obligations - Role of the Investment Representative in providing client service - Systematic approaches to investment management and investment strategies - Role of the Registered Representative in providing client service - Account appropriateness obligations - Purpose and content of relationship disclosure - Institutional client sophistication assessment and suitability exemptions - Trust, agency and fiduciary duty - Internal escalation procedures and subject matter experts - Account appropriateness versus suitability determination - Investment performance benchmarks - Typical services provided by institutional Investment Dealers - Know-your-product obligations - Exemptions from suitability determination requirements |
| Client complaint handling and reporting | 5% | - Investment Dealer complaint reporting obligations and penalties - Role of CIRO and provincial regulators in the complaints handling framework - Policies and procedures for reporting, handling and maintaining complaint records - Recourse available to dissatisfied clients - Investment Dealer obligations to clients - Prohibited practices in client settlement agreements - Potential client issues, liability and consequences |
| Market and company analysis | 8% | - Industry performance analysis - Rules relating to companies - Effects of macroeconomic factors on financial markets - Basic economic theories - Factors influencing the macroeconomy - Basic market theories and stock market behaviour - Economic indicators and sources of information - Technical and statistical analysis tools and information sources - Company performance analysis tools |
| Conflicts of interest and ethics | 15% | - Client confidentiality policies and procedures - Importance of managing conflicts of interest - Ethical principles and standards of conduct for Approved Persons and Investment Dealers - CIRO and other ethical standards of conduct - Requirements regarding positions of influence - Information controls, barriers, firewalls and restricted lists - Importance of ethics and its relationship to rules - Role of cybersecurity in protecting confidential information - Activities outside an Investment Dealer - Ethical and legal responsibilities to clients - Inappropriate or prohibited personal financial dealings with clients - Conflicts of interest management process |
| Market integrity, trade execution and settlement | 12% | - Gatekeeping requirements for manipulative and deceptive practices, unacceptable activities and front running - Margin requirements - Functions of investment banking, research and corporate finance - Reporting obligations to firms and regulators - Features of different account types - Specialized trading agreements for derivative accounts - Order variations, cancellations and corrections - Order entry, trade management, settlement and delivery - Order confirmation requirements - Universal Market Integrity Rules - UMIR gatekeeping obligations - Features of different order types |
| Derivatives | 5% | - Basic uses of derivatives - Prohibited derivative trading practices - Administrative requirements for derivative trading with clients - Features of other derivative contract types - Features of options contract types - Basic transactional elements of futures and options - Listed versus over-the-counter derivative markets - Single and multi-legged derivative trading strategies |
| Prospective client relationships | 10% | - Third parties and other professionals in the client's life - Exemptions under National Instrument 45-106 - Role of cost in product selection - Impact of fees, turnover and taxes on investment returns - Investment Dealer onboarding process - Institutional client qualification requirements - Retail client information collection - Differences between retail and institutional clients - Required account agreement and Firm Welcome package documents - Client record documentation, filing and maintenance - Client relationship model |
| Securities, managed products, mutual funds and other investments | 19% | - Considerations affecting mutual fund investors - Purpose and uses of market indices - Types, features, risks and returns of equities - Considerations affecting equity investors and potential shareholders - Other investments including hedge funds, structured products, alternative investment funds, crypto assets and ESG-related products - Asset classes generally sold and traded at an Investment Dealer - Types, features, risks and returns of fixed income securities and products - Features, risks and returns of managed products - Considerations affecting exchange-traded fund investors - Considerations affecting managed product investors - Considerations affecting fixed income investors - Types of pooled products |
| Overview of Canadian securities regulatory framework | 10% | - Anti-money laundering and anti-terrorist financing legislation and regulations - Criminal Code and its application to financial crime - Role and authority of the Canadian Investment Regulatory Organization - Other applicable laws including confidentiality, privacy, anti-spam, company disclosure and shareholder rights - Function and purpose of clearing agencies - Role and authority of the Canadian Securities Administrators and provincial and territorial securities and derivatives regulators - Investment Dealer registration and individual approval requirements - Function and purpose of other investment industry regulators and agencies - Purpose and implications of the Bank Act and Bankruptcy and Insolvency Act - Function and purpose of the Canadian Investor Protection Fund - Function and purpose of investment industry marketplaces |
1. What impact do investor expectations about future interest rate changes typically have on the prices of fixed-income securities?
A) Expectations about interest rates have no impact on the prices of fixed-income securities
B) Expectations of rising interest rates generally increase the prices of fixed-income securities
C) Expectations of falling interest rates generally increase the prices of fixed-income securities
D) Expectations about interest rates only affect the prices of equity markets, not fixed-income securities
2. A shareholder in Canada receives a dividend payment from a Canadian corporation. Which of the following best describes how dividends are typically received in Canada?
A) Dividends are paid directly to the shareholder's bank or brokerage account
B) Dividends are paid in a combination of stock and cash, where shareholders decide case by case
C) Dividends are automatically reinvested unless the shareholder opts out
D) Dividends are declared and distributed after shareholders submit a claim of dividend
3. How does the Relative Strength Index (RSI) help investors assess market conditions?
A) It indicates whether a stock is overbought or oversold, signaling possible trend reversals
B) It analyzes the company's quarterly earnings to forecast future stock prices
C) It measures the volatility of a stock by comparing its high and low prices
D) It evaluates the price-to-earnings (P/E) ratio of a stock to determine its market value
4. Which of the following statements best describes the benefit of holding a cumulative preferred share?
A) It allows unpaid dividends to accumulate and be paid with priority
B) It accumulates interest on missed dividends until they are paid
C) It allows companies to accumulate redemption rights over a set time
D) It accumulates voting rights regardless of dividend payment status
5. A trader wants to apply a bearish strategy using options to profit from an expected decline in the price of a commodity. What is the most suitable approach?
A) Purchase a put option
B) Sell a put option
C) Purchase a call option
D) A long future position
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: A | Question # 3 Answer: A | Question # 4 Answer: A | Question # 5 Answer: A |
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