Happy Birthday, America!

Happy Birthday to our favourite neighbours!

In honor of the 4th, we are releasing our updated exam prep materials for the New Entrants Course.

It’s even red white and blue! Well…sort of.

Foran New Entrants Prep Books hot off the press

Foran New Entrants Prep Books hot off the press

Happy Lunar New Year!

Did you know that the Canadian Securities Course is increasingly popular in China? And yes, with our online quizzes we can help you pass it in China too!

And for fun, here are some facts on the year of the horse: http://www.theguardian.com/lifeandstyle/2014/jan/31/eight-things-you-probably-didnt-know-about-year-of-horse

Looking for help passing CSC and CPH exams?

Foran Financial Sample Exams are available online. You probably already know that practicing sample exam questions is an effective way of mastering the material. Practicing helps you:

  • Secure your understanding of the material
  • Identify areas of weakness
  • Gage your readiness
  • Manage your time

Foran Financial Online Exams test from the largest, most in depth question bank available for CSC1, CSC2, and CPH. Questions are developed by our securities expert, Ron Foran, who has been helping student pass these exams for over 27 years. Our questions are convenient and affordable (only $50 for 3 exams). A perfect companion to any study regime. For more information and to see what our students are saying about these products, visit our website or give me a call to 416 947 1922. See a sample of our online quizzes below and try some free samples of Foran securities questions in the CSC or CPH categories of our blog. CSC1 sample question CSC1 Sample q answer

New Online Products

Foran is making your exam preparation convenient and accessible with our online sample exam questions for the Canadian Securities Course (CSC), Conduct and Practices Course (CPH) and New Entrants Course (NEC).

Take the CSC1 for example. With a question bank of over 1400 questions, Foran has a comprehensive CSC preparation tool available in an easy to use format.

You get 3 sample exams comprising 100 multiple-choice questions each. We have weighted the questions based on the CSI’s recommended mark distribution for the exam. The questions are taken randomly from a large question bank. Every try generates a unique test for an in depth assessment of your proficiency.

Our tutorial style quizzes give you an immediate answer after each completed question, providing a rationale to help strengthen your understanding.

Our student feedback says it all:

“The online exams were hugely helpful!! They were tough (maybe even tougher) than the exam itself so it raised the bar and really helped a lot!”

If you want more information on our online exams for the CSC, CPH and NEC please visit our website or give us a call at 1 (800) 565-0374.

 

Coming soon:     Foran Case Study Challenge for FPE1® and FPE2®    Examination Candidates will soon be available online

And for those of you preparing to write the 2013 FPE1 exam, don’t forget that we have an online FPE1 sample exam available until December 1st.

CSC1 Exam Prep Questions

Questions

1. Which of the following are components of GDP using the income approach ?

I. salaries, wages and other compensation
II. consumer spending
III. government expenditures
IV. rents, interest and taxes

a) I and IV
b) II, III and IV
c) I, III and IV
d) II and III

2. The Bank of Canada carries out monetary policy primarily through changes in its target for the ?

a) Overnight Rate
b) Bank Rate
c) Prime Rate
d) LIBOR Rate

Answers

 

1. a) I and IV
Chapter 4: Economic Principles

2. a) Overnight Rate
Chapter 5: Economic Policy

For more Canadian Securities Course questions check out our CSC Quiz Books and Online Test Products.

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CSC1 Exam Prep Questions

Questions

1. What is correct about Canadian banks?

I. Banking has undergone tremendous change in the past decade. While traditional banking such as retail, commercial and corporate banking services still exist, banks today provide a variety of services through investment dealer, insurance, mortgage, trust, mutual fund and international subsidiaries.

II. Canadian banks offer consumer and commercial banking products and services, including mortgages and loans, bank accounts and investments.

III. Banks offer financial planning, cash management and wealth management services, either directly or through subsidiaries.

IV. Banks, through subsidiaries, offer a wide range of products that include segregated funds and life insurance products, trust services, leasing, mutual funds, credit card and investment dealer services.

a)         I, II
b)         III, IV
c)         I, II, III
d)         I, II, III, IV

2. Primary motives for buying put options include ?

I.          Receiving premiums
II.        Hedge against the price of the stock rising
III.       Hedge against the price of the stock falling
IV.       Substitute for a short sale
V.        Avoiding commissions

a)         I, IV
b)         II, IV, V
c)         III, IV
d)         I, III, V

Answers

1. d)     I, II, III, IV
Chapter 2: The Canadian Securities Industry

2. c)     III, IV
Chapter 10: Derivatives

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Canadian Securities Course volume 1

Questions

1. Under CIPF coverage, a general account includes the total of what accounts?

I. cash
II. margin
III. short sale
IV. options
V. futures
VI foreign currency

a) I, II
b) I, II, IV, V
c) I, II, III, IV, V
d) I to VI

 

2. What statements are correct about interest rates and the real rate of return?

I. Interest rates are the result of the interaction between parties who want to borrow funds and parties who want to lend funds.

II. The rate of return that a bond (or any investment) offers is made up of two components: the real rate of return and the inflation rate.

III. Because inflation reduces the value of a dollar, the return that is received, known as the nominal rate, must be reduced by the inflation rate to arrive at the actual or real rate of return.

IV. The real rate of return is determined by the supply of funds (supplied by investors) and the demand for loans (created by business). Businesses are more inclined to borrow to invest, when they believe that this investment will earn returns that are higher than the cost of borrowing. For example, when real interest rates are low, the demand for funds will rise.

V. The supply of funds tends to rise when real rates are high, as investors are more likely to lend funds. The nominal rate for loans will be made up of the real rate, as established by supply and demand, plus the expected inflation rate; and the Nominal Rate = Real Rate + Inflation Rate

VI. One factor that affects forecasts for the real rate of return is the business cycle. Real rates rise and fall throughout the business cycle, becoming higher during recessions as demand for funds falls, and lower during the expansion phase as demand for funds increase.

VII. Another factor that affects forecasts for the real rate of return is an unexpected change in the inflation rate. An investor lending money will demand an interest rate that includes his or her expectations for inflation, thereby assuring a satisfactory real rate. If the inflation rate is higher than expected, the investor’s real rate of return will be lower than expected.

a) I, II, III, IV
b) I, II, III, IV, V, VII
c) V, VI, VII
d) I, II, III, IV, V, VI, VII

Answers

 

1. d) I to VI
Chapter 3: The Canadian Regulatory Environment

2. b) I, II, III, IV, V, VII
VI should read: Real rates of return become lower (not higher) during a recession and rise (not fall) during expansion.
Chapter 7: Fixed-Income Securities: Pricing and Trading

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Derivatives Fundamentals Exam Questions

Questions

 

1. What is correct about a NOB spread ?

i. Long the NOB is long ten year US treasury notes and short thirty year US treasury bonds

ii. This is an intermarket spread

iii. Short the NOB is long thirty year US treasury bonds, and short ten year US treasury notes.

iv. With the long NOB the trader anticipates that long term yields will rise relative to short term yields (a normal yield curve)

 

A.        I, II, III

B.        I, III, IV

C.        II, III, IV

D.        I, II, III, IV

 

2. Stock index arbitrage takes place frequently between index futures and the stocks in the underlying index. When arbitraging with stock futures, cash and carry arbitrage is referred to as a ________ program and reverse cash and carry arbitrage is referred to as a _______ program.

A.        long ; short

B.        short ; long

C.        buy ; sell

D.        sell ; buy

 

Answers

1. b) I, III, IV

Statement II is incorrect. This is an intercommodity spread.

In respect to #IV, the long NOB investor believes that short term US treasury notes will rise in price relative to long term US treasury bonds. Rising relative prices on short term US treasury notes means lower yields on short term investments, relative to long term investments. This will cause a wider spread in yields. Long term yields will rise relative to short term yields, which results in a normal yield curve

2. c) buy ; sell

For more on Derivatives Fundamentals and DFOL, check out our Note Books and Sample Exams

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Derivatives Fundamentals Exam Prep

Questions

 

1. The benefit of owning the physical commodity is referred to as the:

A.        supply premium
B.        convenience yield
C.        on-hand benefit
D.        shortage return

 

2. The spot price of cocoa is $1,800 per tonne. The contract size is 10 tonne. The monthly carrying cost for cocoa is $15 per tonne/month. The 6 months futures price of cocoa is $1,880. What is correct?

i. There is an opportunity for cash and carry arbitrage
ii. There is an opportunity for reverse cash and carry arbitrage
iii. Reverse cash and carry arbitrage is more complicated than cash and carry arbitrage
iv. A lease cost will typically reduce the profit

A.        I, III
B.        I, III, IV
C.        II, III
D.        II, III, IV

 

3. A commodity futures price may trade at a lower price than its cash price for all of the following reasons, except?

A.        Arbitrage may be expensive or not possible. Therefore reverse cash and carry arbitrage (buying the futures and selling the asset short) may not be conducted and futures prices will remain under cash prices.
B.        The market may put a premium on holding the cash asset due to supply tightness.
C.        The market expects there will be increased demand in the future
D.        Market participants may feel prices will decline in the future.

 

Answers

1. B     convenience yield

 

2. D     II, III, IV

The spot price is $1,800 and the 6 month futures price should be $1,890. At the $1,880 futures price the 6 months futures is underpriced. An arbitrageur could:

• Short cocoa at                             $1,800
• buy futures at                             $1,880
• invest the funds and earn         $90
• cover short buying cocoa at     $1,880
• Total proceeds of                         $1,890

Risk free profit = $10

Complication: Shorting assumes there is an abundant supply of cocoa and that it is easy to borrow and sell (short).

Reverse cash and carry assumes the short seller will be able to earn the foregone carrying costs by investing the money; which is unlikely.

Also the lender; even if he/she will allow the short seller to use all the cash from the short sale, will want a fee for loaning the underlying asset (cocoa). This is called a lease fee.

 

3. C     If the market expects there will be increased demand in the future, then futures prices will

be higher, not lower

 

For more on Derivatives Fundamentals and DFOL, check out our Note Books and Sample Exams

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CSC2 Exam Prep Questions

Questions

1. Calculate the offering price of a mutual fund with a $23.20 NAVPS and a front end sales commission of 4%.

a)         $22.30
b)         $23.67
c)         $24.12
d)         $24.17

 

2. Ricardo purchases a segregated fund for $75,000 with a 100% guarantee after the legal minimum maturity payment period. I f after 10 years the fund is worth $65,000, which statement is not correct?

a)         the maturity guarantee is $10,000
b)         there is a zero capital gain overall
c)         there is a zero taxable capital gain overall
d)         there is a $10,000 capital loss overall

Answers

 

1. d) $24.17

Offering Price    = NAVPS / (100% – Sales Commission)

= $23.20 / (100% – 4%)
= $23.20/ 0.96
= $24.17

Chapter 18: Mutual Funds, Structure and Regulations

 

2. d) There is not a $10,000 capital loss overall.

There is zero capital loss overall. The segregated fund is redeemed for $65,000, which is a $10,000 capital loss. However the maturity guarantee is $10,000 which is a capital gain. Overall the capital loss is zero.

Chapter 20: Segregated Funds and Other Insurance Products

 

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