Unit 1
This refers to the risk that the borrower will default on his or her legal obligation to make the interest payments.
What is Default Risk
A statement records all cash inflows and all cash outflows for an individual or a household over a specific period of time, such as a month or a year.
What is a Cash Flow Statement
money market investments issued by the federal and provincial governments for terms of up to 364 days.
What are Treasury Bills (t-bills)
Robert and Joanne have a combined gross annual income of about $84,000. They want to buy a bigger house, which will have property taxes of $3,600 per year and will cost $1,800 per year to heat. They have one outstanding car loan, on which they make payments of $300 per month. They are looking at a monthly mortgage payment of $1,800. This amount is Robert and Joanne's TDSR
What is 36.42%?
This is the price of Money Market Mutual funds
What is $10
If an investor locks into an investment that pays a set interest rate, the present value of those future interest payments will decrease if the interest rates on comparable investments increase.
What is Interest Rate Risk
This is the amount that a client should have in an account for an emergency reserve
What is 4-6 months living expenses
a crown corporation established by the federal government to provide insurance for depositors against losses arising from the failure of one of its member financial institutions.
What is CDIC
This is the price of a $1,000,000 91-day T-bill when the prevailing interest rate was 2%
Purchase price = (par value / (1 + (quoted yield x (term/365))))
what is $995,025. ?
This is the type of investment which would be most appropriate for someone looking for a steady stream of income with minimal risk.
What is a portfolio of Government bonds.
How much is the Disability Savings Grant on a $1500 deposit if an individual's household income is $65,000/year?
$3500
($1500 on first $500, $2000 on the next $1000)
This asset is exempt from capital gains tax upon disposition
What is your primary residence?
Investments denominated in foreign currencies give rise to foreign exchange gains or losses when the value of the Canadian dollar changes. Such exchange gains or losses are treated as capital gains or capital losses to the extent they exceed this amount.
What is $200
This is the end value of a $100,000 GIC paying 2.85% compounding monthly after 2 years
What is
$105,858.43?
Cash = Inflation
Income = Interest Rate
Growth = Market
the process of determining the appropriate proportions of different classes of assets, such as short-term debt securities (for example, money market funds, treasury bills, guaranteed investment certificates), long-term debt securities (for example, bonds and debentures) and equities (for example, stocks), to be included in an investment portfolio
What is Asset Allocation
The maximum recommended percentage of gross income a client should allocate towards housing expenses
What is GDSR? 32%
The amount of interest reported for income tax purposes, but not received or receivable
What is an accrual? (accrued interest)
In January 2024 Daniel purchased 500 shares of XYZ @ $27.43/share, 250 shares of ABC at $16.59 per share and 190 shares of QRS at $21.67.
In May of 2027 Daniel sold half of his shares (ie 250 of XYZ etc) when XYZ was priced at $32.95, ABC was 14.16 and QRS was 22.19.
What was his taxable capital gain(loss) for 2027?
XYZ 1380
ABC (303.75)
QRS 49.40
Total$1,125.65
When a treasury bill costs $97,000 and the investor receives $100,000 at maturity, the $3000 difference is treated as ________ for income tax purposes.
What is Interest income?
The MOST IMPORTANT rule salespeople must keep in mind when selling securities
What is KYC (know your client)
20% downpayment
What is the amount required for a conventional mortgage?
products that guarantee a full return of principal at maturity while also providing the opportunity to participate in the positive performance of equity markets.
Principal Protected Notes (PPNs) (thought market mix GIC could also be acceptable answer)
This is the price of a 3 year, $7000 face value, semi annual pay bond with a coupon of 9% when the prevailing interest rate is 4%.
What is $7,980.25
This is the systemic risk of dividend income
What is interest rate risk?