CSI Updated CSC1 Exam Questions and Answers by matthias

Retained earningsrepresent the portion of a company’s annual profit that is retained and not paid out as dividends. It is used to reinvest in the business or pay down debt.

B. Comprehensive incomeincludes all changes in equity except those from owner contributions or distributions.

C. Share capitalrefers to funds raised by issuing shares.

D. Gross profitis revenue minus the cost of goods sold, not the portion retained.

References:Volume 1, Chapter 11 ("Corporations and Their Financial Statements")​.

Treasury bills (T-bills) are short-term fixed-income securities issued by the Government of Canada with maturities of one year or less, including terms as short as six months or less. They do not pay interest in the conventional sense. Instead, they are sold at a discount to their facevalue, and investors receive the full face value upon maturity. The difference between the purchase price and the face value represents the investor's earnings.

A. Guaranteed bonds: These are long-term securities that pay periodic interest (coupons) and do not fit the short-term, non-interest-paying description of T-bills.

B. Commercial paper: Issued by corporations, not governments, and used to finance short-term liabilities.

D. Term deposits: These are bank products, not government securities, and typically pay interest over their term.

TheCanada Deposit Insurance Corporation (CDIC)insures eligible deposits (e.g., term deposits) up to a maximum of$100,000 per depositor per member institution. In this case:

Keith has $150,000 in ABC Trust Company → $100,000 is insured.

Keith has $75,000 in XYZ Trust Company → Entire $75,000 is insured.

Total insured amount = $100,000 (ABC) + $75,000 (XYZ) = $200,000.

References:Volume 1, Chapter 3 ("Investor Protection Funds and Insurance")​.

To calculate the break-even price for the put options:

The strike price of the put is $55.

The cost per put option is $2.

For the investor to break even, the stock must fall below the strike price by at least the cost of the option.

Break-even price = Strike price - Cost of the option= $55 - $2 =$53

If ABT Ltd. trades at $53, the investor can sell the stock at $55 using the put and recover the $2 premium paid.

References:

Volume 1, Chapter 10:Derivatives, section on "Options Basics" explains the calculation of break-even prices for options​.