Comprehensive Study Guide for the Canadian Securities Course (CSC) Volume

This guide is organized to provide you with a detailed overview of key concepts from each
chapter, focusing on the essential points you need to grasp for your exam.

Chapter 1: The Canadian Securities Industry

Overview of the Canadian Securities Industry

 Participants:
o Investment Dealers: Serve as intermediaries between suppliers and users of
capital, facilitating transactions in the securities market. They play a crucial role
in maintaining market liquidity and efficiency.
o Suppliers of Capital: These include retail and institutional investors who provide
funds by purchasing securities.
o Users of Capital: Governments, corporations, and other entities that issue
securities to raise funds.
o Clearing and Settlement Organizations: These include entities like CDS
Clearing and Depository Services Inc., which ensure that transactions are
completed accurately and efficiently.
o Self-Regulatory Organizations (SROs): The Canadian Investment Regulatory
Organization (CIRO) oversees the activities of investment dealers and enforces
compliance with regulations.
o Provincial Regulators: Each province in Canada has its regulatory body
responsible for enforcing securities legislation.
 Flow of Funds:
o Understand the movement of money from investors to borrowers via financial
markets, emphasizing the role of financial intermediaries in this process.

Role of Investment Dealers

 Retail Firms: Focus on individual clients, offering services such as financial advice and
brokerage.
 Institutional Firms: Cater to large clients, including pension funds and mutual funds,
handling large-scale transactions.
 Integrated Firms: Operate across both retail and institutional markets, providing a full
range of services.

Principal vs. Agency Transactions

 Principal Transactions: Dealers buy or sell securities from their own inventory, taking
on the associated risks.
  Agency Transactions: Dealers act on behalf of clients, facilitating transactions without
holding inventory.

Chapter 2: The Capital Market

Investment Capital

 Characteristics of Capital: Capital is mobile, sensitive to its environment, and scarce. It

flows to regions with favourable conditions such as stable governance, minimal
regulation, and profitable investment opportunities.
 Suppliers and Users of Capital: Understand the sources of capital, including retail,
institutional, and foreign investors, and its uses by individuals, businesses, and
governments.

Financial Instruments

 Equity Securities: Represent ownership in a company, including common and preferred

shares.
 Debt Securities: Represent loans made by investors to borrowers, including bonds and
debentures.
 Derivatives: Financial contracts whose value is derived from underlying assets like
stocks, bonds, or commodities.

Financial Markets

 Primary Market: The market where new securities are issued and sold for the first time,
providing capital directly to issuers.
 Secondary Market: The market where existing securities are traded among investors,
providing liquidity and ongoing price discovery.
 Auction vs. Dealer Markets: In auction markets, buyers and sellers compete directly,
while in dealer markets, transactions occur through a network of dealers .

Chapter 3: The Canadian Regulatory Environment

The Regulators

 Provincial Regulators: These entities create and enforce securities laws within each
province, often delegating authority to SROs.
 Self-Regulatory Organizations (SROs): CIRO, the national SRO, regulates investment
dealers and mutual fund dealers across Canada.

Regulation and Supervision

  Principles-Based Regulation: Focuses on achieving desired regulatory outcomes rather
than adhering strictly to rules.
 Client-Focused Reforms: Reforms introduced to ensure that clients' interests are
prioritized by enhancing Know Your Client (KYC) and Know Your Product (KYP)
procedures .

Remediation and Ethical Standards

 Investor Protection: The Canadian Investor Protection Fund (CIPF) protects clients of
insolvent dealers.
 Ethical Conduct: Avoid unethical practices such as insider trading and front running to
maintain market integrity.

Chapter 4: Overview of Economics

Defining Economics

 Microeconomics: Focuses on individual consumers and businesses, and their decision-

making processes.
 Macroeconomics: Deals with the economy as a whole, including issues like inflation,
unemployment, and economic growth .

Measuring Economic Growth

 Gross Domestic Product (GDP): The total market value of all finished goods and
services produced within a country.
 Productivity: The efficiency with which goods and services are produced, a key
determinant of long-term economic growth.

The Business Cycle

 Phases: The business cycle includes recovery, expansion, peak, contraction, and trough.
 Economic Indicators: Leading, lagging, and coincident indicators are used to analyze
and predict economic conditions .

The Labour Market

 Unemployment Types: Includes cyclical, frictional, structural, and seasonal

unemployment.
 Interest Rates: Influenced by factors such as the supply and demand for capital, inflation
expectations, and central bank policies.

Inflation
  Measurement: Typically measured by the Consumer Price Index (CPI).
 Impact: Rising inflation erodes purchasing power and can lead to higher interest rates,
which may slow economic growth .

Chapter 5: Economic Policy

Fiscal Policy

 Government Spending and Taxation: Tools used to influence economic activity,

employment levels, and growth.
 Federal Budget: A primary instrument for implementing fiscal policy, affecting capital
markets through government borrowing and spending.

Monetary Policy

 Bank of Canada: Regulates money supply and short-term interest rates to achieve
economic stability.
 Monetary Tools: Includes the target for the overnight rate, open market operations, and
the management of government deposits .

Challenges of Government Policy

 Policy Effectiveness: Depends on the economy's response, the timing of interventions,

and the ability to reverse policies when necessary.

Chapter 6: Fixed-Income Securities: Features and Types

The Fixed-Income Marketplace

 Rationale for Issuing Debt Securities: Governments, corporations, and other entities
issue fixed-income securities to finance operations and expansions. These instruments
represent debt obligations of the issuer.
 Types of Fixed-Income Securities: Includes bonds, debentures, and other debt
instruments. Key features include maturity date, coupon rate, face value, and issuer type
(government or corporate).

Government of Canada Securities

 Types: Bonds, real return bonds, and T-bills, considered low-risk due to the
creditworthiness of the government.
 Provincial and Municipal Securities: Similar to federal bonds but generally offer
higher yields due to slightly higher risk.
Corporate Bonds

 Types: First mortgage bonds, collateral trust bonds, equipment trust certificates, and
subordinated debentures. Corporate bonds typically offer higher yields but come with
increased risk.

Other Fixed-Income Securities

 Commercial Paper, Term Deposits, and GICs: Short-term instruments typically used
for preserving capital while earning modest returns.
 Bond Quotes and Ratings: Learn how to read bond quotes and understand the
significance of credit ratings provided by agencies like DBRS, Moody's, and S&P .

Chapter 7: Fixed-Income Securities: Pricing and Trading

Calculating Price and Yield of a Bond

 Bond Pricing: Determined by discounting future cash flows (interest and principal) to
their present value using the current market interest rate.
 Yield Calculations: Understand yield to maturity (YTM) and current yield.

Term Structure of Interest Rates

 Yield Curve: Represents the relationship between interest rates and bond maturities. The
curve can be normal (upward-sloping), flat, or inverted depending on economic
conditions.

Bond Pricing Properties

 Interest Rates and Bond Prices: Inverse relationship—when interest rates rise, bond
prices fall and vice versa.
 Duration: A measure of a bond's sensitivity to interest rate changes. Higher duration
means higher sensitivity.

Bond Market Trading

 Primary vs. Secondary Markets: Bonds are issued in primary markets and traded in
secondary markets. Understand the roles of buy-side and sell-side participants.
 Bond Indexes: Used by portfolio managers as benchmarks for performance measurement
.

Chapter 8: Equity Securities: Common and Preferred Shares

Common Shares

 Features and Risks: Represent ownership in a company, offering potential for capital
appreciation and dividends, but with higher risk.
 Voting Rights: Common shareholders typically have voting rights on key company
decisions.

Preferred Shares

 Features: Provide a fixed income stream with higher claims on assets than common
shares but usually lack voting rights.
 Types: Fixed-rate perpetual, floating-rate, and fixed-reset preferred shares, each with
different characteristics regarding dividends and redemption.

Stock Indexes

 Importance: Track the performance of a basket of common shares, used as benchmarks

for evaluating market performance and portfolio returns .

Chapter 9: Equity Securities: Equity Transactions

Cash and Margin Accounts

 Cash Accounts: Require full payment for purchases or full delivery for sales by the
settlement date.
 Margin Accounts: Allow borrowing money to purchase securities, amplifying both
potential returns and risks due to margin calls.

Trading and Settlement Procedures

 Process: Involves the buyer, seller, investment advisors, and trading departments.
Settlement usually occurs one business day after the transaction.

Types of Orders

 Market, Limit, and Stop Orders: Market orders are executed immediately at the current
price, while limit orders set maximum purchase or minimum selling prices. Stop orders
trigger sales when prices drop to a specified level .

Chapter 10: Derivatives

The Role of Derivatives

  Definition: Financial contracts whose value is derived from underlying assets like stocks,
bonds, or commodities. Used for hedging or speculation.
 Types: Include options, forwards, futures, rights, and warrants.

Options

 Call and Put Options: Call options allow purchasing an asset at a specific price before a
certain date, while put options allow selling an asset at a specific price.

Forwards and Futures

 Differences: Forwards are customized, over-the-counter contracts, while futures are

standardized and traded on exchanges.

Rights and Warrants

 Rights: Enable existing shareholders to buy additional shares at a discount before the
public.
 Warrants: Similar to options but typically issued by the company, allowing purchase of
shares at a specific price before a certain date .

Chapter 11: Corporations and Their Financial Statements

Corporations and Their Structure

 Types of Business Structures:

o Sole Proprietorship: A single individual owns and operates the business, and
personal assets are at risk for business debts.
o Partnership: A business structure involving two or more individuals who share
responsibilities and liabilities. It can be a general or limited partnership.
o Corporation: A separate legal entity owned by shareholders. It can raise funds
through issuing equity or debt, offering limited liability to shareholders .

Advantages and Disadvantages of Incorporation

 Advantages:
o Limited Liability: Shareholders' risk is limited to their investment in the
corporation’s shares.
o Continuity: The corporation continues to exist independently of the life of its
shareholders .
 Disadvantages:
o Double Taxation: Corporations are taxed on profits, and shareholders are taxed
again on dividends.
 o Regulation and Disclosure Requirements: Corporations face more stringent
regulatory and reporting obligations .

Financial Statements of a Corporation

 Statement of Financial Position (Balance Sheet):

o Assets: What the company owns (e.g., property, inventory).
o Liabilities: What the company owes (e.g., loans, payables).
o Equity: The residual interest in the assets of the company after deducting
liabilities; often referred to as book value .
 Statement of Comprehensive Income (Income Statement):
o Revenue: The income generated from normal business operations.
o Expenses: Costs incurred in the operation of the business.
o Net Income: The profit or loss after all expenses, taxes, and other costs are
deducted from revenue .
 Statement of Changes in Equity:
o Records changes in the ownership interest of the shareholders, including retained
earnings and dividends paid .
 Statement of Cash Flows:
o Shows how cash is generated and used in operating, investing, and financing
activities .

Public Company Disclosures and Investor Rights

 Continuous Disclosure: Public companies must regularly disclose material changes in

their business to ensure transparency.
 Statutory Rights of Investors: Include the right of withdrawal, rescission, and to take
legal action for damages in cases of misleading information .

Takeover Bids and Insider Trading

 Takeover Bids: Regulations governing the acquisition of a significant portion of a

company's shares, often requiring an offer to all shareholders.
 Insider Trading: The illegal practice of trading based on non-public, material
information .

Chapter 12: Financing and Listing Securities

Government and Corporate Finance

 Raising Capital:
o Government Financing: Typically conducted through auctions or fiscal agents,
where governments issue bonds to finance operations.
 o Corporate Financing: Corporations can issue equity (common or preferred
shares) or debt (bonds, debentures) to raise capital.

The Dealer’s Advisory Relationship with Corporations

 Advisory Role: Dealers advise corporations on the best approach for issuing securities,
considering market conditions, investor preferences, and the company's financial
structure.

Bringing Securities to the Market

 Prospectus Requirements: A detailed disclosure document must be prepared when

offering securities to the public, ensuring investors are fully informed.
 After-Market Stabilization: Measures taken by the lead dealer to support the price of
newly issued securities.

Other Methods of Distributing Securities

 Private Placements: Securities sold directly to a small group of institutional investors,

often with fewer disclosure requirements.
 Public Offerings: Securities are sold to the general public, often through an underwriter
who may act on a best-efforts basis or as a principal in a firm commitment.

The Listing Process

 Advantages of Listing: Includes increased visibility, market valuation, and access to

capital.
 Disadvantages of Listing: Increased regulatory requirements, costs, and potential for
market scrutiny.

Delisting

 Delisting: A company’s securities may be delisted from an exchange for various reasons,
such as failure to meet listing standards or as a result of a merger.
Chapter 1: The Canadian Securities Industry

 Overview of the Industry: Participants, roles of investment dealers, clearing and

settlement organizations, self-regulatory organizations (SROs), and provincial regulators.
 Flow of Funds: Movement of money between investors and borrowers.
 Principal vs. Agency Transactions: Understanding how investment dealers operate.

Chapter 2: The Capital Market

 Investment Capital: Characteristics, suppliers, and users of capital.

 Financial Instruments: Equity securities, debt securities, and derivatives.
 Financial Markets: Primary and secondary markets, auction vs. dealer markets.

Chapter 3: The Canadian Regulatory Environment

 Regulatory Bodies: Provincial regulators, SROs (e.g., CIRO), and investor protection
funds.
 Regulation and Supervision: Principles-based regulation, client-focused reforms.
 Ethical Standards: Avoiding unethical practices like insider trading.

Chapter 4: Overview of Economics

 Macroeconomics vs. Microeconomics: Key differences and decision-makers.

 Measuring Economic Growth: Gross Domestic Product (GDP) and productivity.
 The Business Cycle: Phases, economic indicators, and the labor market.

Chapter 5: Economic Policy

 Fiscal Policy: Government spending, taxation, and the federal budget.

 Monetary Policy: Role of the Bank of Canada, monetary tools.
 Policy Challenges: Effectiveness of fiscal and monetary policies.

Chapter 6: Fixed-Income Securities: Features and Types

 Rationale for Issuing Debt Securities: Government and corporate debt instruments.
 Types of Fixed-Income Securities: Bonds, debentures, and government securities.
 Bond Quotes and Ratings: Understanding bond prices and credit ratings.

Chapter 7: Fixed-Income Securities: Pricing and Trading

 Bond Pricing: Determining the price of bonds using discount rates.

 Yield Calculations: Yield to maturity (YTM), current yield, and duration.
 Bond Market Trading: Primary vs. secondary markets, bond indexes.

Chapter 8: Equity Securities: Common and Preferred Shares

  Common Shares: Features, risks, and voting rights.
 Preferred Shares: Types, features, and dividend structures.
 Stock Indexes: Importance of tracking market performance.

Chapter 9: Equity Securities: Equity Transactions

 Cash and Margin Accounts: Differences, risks, and procedures.

 Trading and Settlement Procedures: Process and types of orders (market, limit, stop).
 Margin Calls: Understanding the risks associated with margin trading.

Chapter 10: Derivatives

 Definition and Types: Options, forwards, futures, rights, and warrants.

 Options: Call and put options explained.
 Forwards and Futures: Differences between these contracts.

Chapter 11: Corporations and Their Financial Statements

 Business Structures: Sole proprietorship, partnership, and corporation.

 Financial Statements: Balance sheet, income statement, and cash flow statement.
 Investor Rights and Disclosures: Continuous disclosure, takeover bids, and insider
trading.

Chapter 12: Financing and Listing Securities

 Raising Capital: Government and corporate financing methods.

 Dealer’s Advisory Role: Advising on the best approach for issuing securities.
 Listing Process: Advantages and disadvantages of listing on an exchange.

Formulas and Examples:

 GDP Expenditure Approach: GDP=C+I+G+(X−M)GDP = C + I + G + (X -

M)GDP=C+I+G+(X−M)
 Bond Pricing Formula: P=C(1+r)1+C(1+r)2+⋯+C+M(1+r)nP = \frac{C}{(1+r)^1} + \
frac{C}{(1+r)^2} + \dots + \frac{C + M}{(1+r)^n}P=(1+r)1C+(1+r)2C+⋯+(1+r)nC+M
 Dividend Discount Model: P=D1r−gP = \frac{D_1}{r - g}P=r−gD1
 Sharpe Ratio: S=Rp−RfσpS = \frac{R_p - R_f}{\sigma_p}S=σpRp−Rf
 Price-Earnings Ratio: P/E=MarketPriceperShareEarningsperShareP/E = \frac{Market
Price per Share}{Earnings per Share}P/E=EarningsperShareMarketPriceperShare

Chapter 1: The Canadian Securities Industry

Key Concepts:
  Participants in the Industry:
o Investment Dealers: Act as intermediaries between suppliers and users of capital.
 Retail Firms: Serve individual clients with financial advice and brokerage
services.
 Institutional Firms: Handle large-scale transactions for clients like
pension funds.
 Integrated Firms: Operate across both retail and institutional markets.
o Suppliers of Capital: Include retail and institutional investors.
o Users of Capital: Governments and corporations issuing securities.
o Clearing and Settlement Organizations: e.g., CDS Clearing and Depository
Services Inc.
o Self-Regulatory Organizations (SROs): e.g., Canadian Investment Regulatory
Organization (CIRO).
o Provincial Regulators: Enforce securities legislation in each province.

Key Processes:

 Flow of Funds: Describes how money moves from investors to borrowers via financial
markets.
 Principal vs. Agency Transactions:
o Principal Transactions: Dealers buy/sell securities from their own inventory.
o Agency Transactions: Dealers act on behalf of clients without holding inventory.

Chapter 2: The Capital Market

Key Concepts:

 Investment Capital:
o Characteristics: Mobile, sensitive to environment, and scarce.
o Suppliers: Retail, institutional, and foreign investors.
o Users: Individuals, businesses, and governments.
 Financial Instruments:
o Equity Securities: Common and preferred shares.
o Debt Securities: Bonds and debentures.
o Derivatives: Contracts like options and futures.
 Financial Markets:
o Primary Market: Where new securities are issued.
o Secondary Market: Where existing securities are traded.
o Auction vs. Dealer Markets:
 Auction Markets: Buyers and sellers compete directly.
 Dealer Markets: Transactions occur through a network of dealers.

Examples:
  Primary Market Example: A company issues new shares in an IPO.
 Secondary Market Example: Trading stocks on the Toronto Stock Exchange.

Chapter 3: The Canadian Regulatory Environment

Key Concepts:

 Regulatory Bodies:
o Provincial Regulators: Responsible for securities regulation within each
province.
o Self-Regulatory Organizations (SROs): CIRO regulates investment dealers and
mutual fund dealers.
 Regulation and Supervision:
o Principles-Based Regulation: Focuses on achieving regulatory outcomes rather
than strict rules.
o Client-Focused Reforms: Enhances Know Your Client (KYC) and Know Your
Product (KYP) procedures.
 Ethical Standards:
o Avoid unethical practices like insider trading and front running.

Chapter 4: Overview of Economics

Key Concepts:

 Macroeconomics vs. Microeconomics:

o Macroeconomics: Deals with the economy as a whole (inflation, unemployment).
o Microeconomics: Focuses on individual consumers and businesses.
 Measuring Economic Growth:
o Gross Domestic Product (GDP): Total market value of all finished goods and
services within a country.
o Productivity: Efficiency in producing goods and services.
 The Business Cycle:
o Phases: Recovery, expansion, peak, contraction, trough.
o Economic Indicators: Leading, lagging, and coincident indicators.

Formulas:

 GDP Expenditure Approach: GDP=C+I+G+(X−M)GDP = C + I + G + (X -

M)GDP=C+I+G+(X−M)
o CCC = Consumer Expenditures
o III = Business Investment
o GGG = Government Spending
 o X−MX - MX−M = Net Exports (Exports - Imports)

Chapter 5: Economic Policy

Key Concepts:

 Fiscal Policy:
o Government Spending and Taxation: Tools to influence economic activity and
growth.
o Federal Budget: Affects capital markets through government borrowing and
spending.
 Monetary Policy:
o Bank of Canada: Regulates money supply and short-term interest rates.
o Monetary Tools: Target for the overnight rate, open market operations.
 Challenges of Government Policy:
o Effectiveness depends on timing, economy’s response, and ability to reverse
policies.

Chapter 6: Fixed-Income Securities: Features and Types

Key Concepts:

 Rationale for Issuing Debt Securities:

o Governments and corporations issue fixed-income securities to finance
operations.
 Types of Fixed-Income Securities:
o Bonds: Debt instruments with a maturity date and coupon rate.
o Debentures: Unsecured bonds.
o Government Securities: Bonds, T-bills considered low-risk.
 Bond Quotes and Ratings: Credit ratings by agencies like DBRS, Moody's, and S&P.

Formulas:

 Current Yield: Current Yield=Annual Cash FlowCurrent Market Price×100\

text{Current Yield} = \frac{\text{Annual Cash Flow}}{\text{Current Market Price}} \
times 100Current Yield=Current Market PriceAnnual Cash Flow×100
 Yield to Maturity (YTM): Use financial calculators to solve based on bond price,
coupon rate, and time to maturity.

Chapter 7: Fixed-Income Securities: Pricing and Trading

Key Concepts:

 Bond Pricing:
o Determined by discounting future cash flows (interest and principal) to their
present value.
 Yield Calculations:
o Yield to Maturity (YTM): Total return anticipated if the bond is held until
maturity.
o Current Yield: Annual coupon payment divided by the bond’s current price.
 Bond Market Trading:
o Primary Market: Where bonds are initially sold.
o Secondary Market: Where bonds are traded post-issuance.
o Bond Indexes: Used as benchmarks for portfolio performance.

Formulas:

 Bond Pricing Formula: P=C(1+r)1+C(1+r)2+⋯+C+M(1+r)nP = \frac{C}{(1+r)^1} + \

frac{C}{(1+r)^2} + \dots + \frac{C + M}{(1+r)^n}P=(1+r)1C+(1+r)2C+⋯+(1+r)nC+M

Chapter 8: Equity Securities: Common and Preferred Shares

Key Concepts:

 Common Shares:
o Features: Ownership in a company, potential for capital appreciation, and
dividends.
o Risks: Higher risk compared to bonds.
o Voting Rights: Typically have voting rights on key company decisions.
 Preferred Shares:
o Fixed Income Stream: Higher claims on assets than common shares but usually
lack voting rights.
o Types: Fixed-rate perpetual, floating-rate, and fixed-reset preferred shares.
 Stock Indexes:
o Track the performance of a basket of common shares.

Examples:

 Stock Index Example: S&P/TSX Composite Index.

Chapter 9: Equity Securities: Equity Transactions

Key Concepts:
  Cash and Margin Accounts:
o Cash Accounts: Require full payment for purchases by the settlement date.
o Margin Accounts: Allow borrowing money to purchase securities, increasing
potential returns and risks.
 Trading and Settlement Procedures:
o Settlement Process: Usually occurs one business day after the transaction.
 Types of Orders:
o Market Orders: Executed immediately at the current price.
o Limit Orders: Set maximum purchase or minimum selling prices.
o Stop Orders: Trigger sales when prices drop to a specified level.

Chapter 10: Derivatives

Key Concepts:

 Definition and Role:

o Financial contracts derived from underlying assets (stocks, bonds, commodities).
o Used for hedging or speculation.
 Types of Derivatives:
o Options: Contracts that give the right, but not the obligation, to buy/sell an asset
at a specific price.
o Forwards and Futures: Contracts to buy/sell an asset at a future date.
 Options:
o Call Options: Right to purchase an asset at a specific price before a certain date.
o Put Options: Right to sell an asset at a specific price before a certain date.

Formulas:

 Intrinsic Value of a Call Option: Intrinsic Value=Price of the Underlying−Strike Price\

text{Intrinsic Value} = \text{Price of the Underlying} - \text{Strike
Price}Intrinsic Value=Price of the Underlying−Strike Price
 Intrinsic Value of a Put Option: Intrinsic Value=Strike Price−Price of the Underlying\
text{Intrinsic Value} = \text{Strike Price} - \text{Price of the
Underlying}Intrinsic Value=Strike Price−Price of the Underlying

Chapter 11: Corporations and Their Financial Statements

Key Concepts:

 Business Structures:
o Sole Proprietorship: Single owner, unlimited liability.
o Partnership: Two or more owners sharing responsibilities.
 o Corporation: Separate legal entity with limited liability.
 Financial Statements:
o Balance Sheet: Assets, liabilities, and equity.
o Income Statement: Revenue, expenses, and net income.
o Statement of Cash Flows: Cash generated and used in operating, investing, and
financing activities.
 Investor Rights and Disclosures:
o Continuous Disclosure: Regular updates on material changes.
o Takeover Bids: Regulations for acquiring significant portions of a company’s
shares.
o Insider Trading: Illegal trading based on non-public information.

Formulas:

 Return on Equity (ROE): ROE=ProfitTotal EquityROE = \frac{\text{Profit}}{\

text{Total Equity}}ROE=Total EquityProfit
 Earnings per Share (EPS):
EPS=ProfitWeighted Average Number of Shares OutstandingEPS = \frac{\text{Profit}}
{\text{Weighted Average Number of Shares
Outstanding}}EPS=Weighted Average Number of Shares OutstandingProfit

Chapter 12: Financing and Listing Securities

Key Concepts:

 Raising Capital:
o Government Financing: Issuing bonds through auctions or fiscal agents.
o Corporate Financing: Issuing equity or debt to raise funds.
 Dealer’s Advisory Role:
o Advising on the best approach for issuing securities considering market
conditions and financial structure.
 Listing Process:
o Advantages: Increased visibility, market valuation, access to capital.
o Disadvantages: Increased regulatory requirements, costs, potential market
scrutiny.
 Delisting:
o Occurs when a company’s securities no longer meet listing standards or after a
merger.