Conduct and Practices Handbook (CPH) Exam
Complete Questions and Guide Answers
100% Verified Graded A+
1. Formal Take-over Bid
Answer: An otter made to the security holders of a company to purchase the voting securities of a company
which, with the otteror's already-owned securities, will in total exceed 20% of the outstanding voting securities of the
company.
2. Compliance
Answer: Compliance is following the rules, whether those rules are legal and regulatory requirements or
internal policies.
3. Confidentiality
Answer: The ethical principle that a securities industry professional will hold secret all information relating to
a client and the client's account unless the client consents to its disclosure, or a formal request is made by the
appropriate regulators
4. Conflict of Interest
, Answer: A situation in which a registrant's personal or financial interests conflict with those of
a client or the registrant's dealer member. In cases of potential or actual conflict of interest, a client's interests must be
given priority and the conflict should be disclosed.
5. Discretionary Account
Answer: A securities account for which the client has given a dealer member specific written
authorization to make decisions regarding the security, price, quantity or timing of orders in the account.
6. Due Diligence
Answer: Investigation into and verification of the details of a potential investment, such as an exami- nation of
operations and management, and the verification of material facts.
7. Duty of Care
Answer: An IA's duty to his client to ensure that he/she does everything "reasonably practicable" to protect the
client's assets. This involves devoting the time and attention necessary to make informed decisions.
Also known as Standard A
8. Fiduciary Duty
Answer: A legal term that describes a high degree of duty of care.
9. Know Your Client (KYC) Rule
Answer: The cardinal rule in making investment recommendations. The IA must know all relevant
information about every client and every order to ensure that his/her recommendations to clients are suitable.
,10. Personal Information Protection and Electronic Documents Act (PIPEDA)
Answer: The
Act that governs each dealer member's information-gathering processes and regulates how firms may use and disclose
the personal information that is collected in the course of doing business.
11. Registrant Standards of Conduct
Answer: The Standards of Conduct amplify the Code of Ethics and set out
certain specifics of required behavior. These requirements are based in large part on the provincial Securities Acts and the
SRO rules.
12. Suitability
Answer: A registrant's major concern in making investment recommendations. Unless a suitability exemp-
tion applies, all information about a client and a security must be analyzed to determine whether a particular investment is
suitable for a client.
13. Unsolicited Order
Answer: An order entered by a client where neither the client's IA or his/her dealer member recommended
the order.
14. Autorité des marchés financiers (Financial Services Authority) (AMF)
Answer: The body that administers the regulatory framework surrounding Québec's financial sector securities
sector.
, 15. Canadian Investor Protection Fund (CIPF)
Answer: A fund that protects investors against the insolvency of any dealer member.
16. Disclosure
Answer: One of the principles of securities regulation in Canada. This principle entails full, true and plain
disclosure of all material facts necessary to make reasoned investment decisions.
17. Financial Transactions Reports Analysis Centre of Canada (FINTRAC)
Answer: FINTRAC receives, analyzes, assesses and discloses financial intelligence on suspected money laundering,
terrorist financing, and threats to the security of Canada.
18. Integrated Market Enforcement Teams (IMETs)
Answer: An initiative of the RCMP and the federal
government to detect, investigate and deter capital markets fraud.
19. Joint Serious Offences Team ( JSOTs)
Answer: JSOT is an enforcement partnership between the OSC, the RCMP Financial Crime program and the
Ontario Provincial Police Anti-Rackets Branch. JSOT investigates and prosecutes serious violations of the law using
provisions of the Securities Act (Ontario) and Criminal Code.
20. Investment Industry Association of Canada (IIAC)
Answer: IIAC is a member-based, advocacy
association that advances the growth and development of the Canadian investment industry.
Complete Questions and Guide Answers
100% Verified Graded A+
1. Formal Take-over Bid
Answer: An otter made to the security holders of a company to purchase the voting securities of a company
which, with the otteror's already-owned securities, will in total exceed 20% of the outstanding voting securities of the
company.
2. Compliance
Answer: Compliance is following the rules, whether those rules are legal and regulatory requirements or
internal policies.
3. Confidentiality
Answer: The ethical principle that a securities industry professional will hold secret all information relating to
a client and the client's account unless the client consents to its disclosure, or a formal request is made by the
appropriate regulators
4. Conflict of Interest
, Answer: A situation in which a registrant's personal or financial interests conflict with those of
a client or the registrant's dealer member. In cases of potential or actual conflict of interest, a client's interests must be
given priority and the conflict should be disclosed.
5. Discretionary Account
Answer: A securities account for which the client has given a dealer member specific written
authorization to make decisions regarding the security, price, quantity or timing of orders in the account.
6. Due Diligence
Answer: Investigation into and verification of the details of a potential investment, such as an exami- nation of
operations and management, and the verification of material facts.
7. Duty of Care
Answer: An IA's duty to his client to ensure that he/she does everything "reasonably practicable" to protect the
client's assets. This involves devoting the time and attention necessary to make informed decisions.
Also known as Standard A
8. Fiduciary Duty
Answer: A legal term that describes a high degree of duty of care.
9. Know Your Client (KYC) Rule
Answer: The cardinal rule in making investment recommendations. The IA must know all relevant
information about every client and every order to ensure that his/her recommendations to clients are suitable.
,10. Personal Information Protection and Electronic Documents Act (PIPEDA)
Answer: The
Act that governs each dealer member's information-gathering processes and regulates how firms may use and disclose
the personal information that is collected in the course of doing business.
11. Registrant Standards of Conduct
Answer: The Standards of Conduct amplify the Code of Ethics and set out
certain specifics of required behavior. These requirements are based in large part on the provincial Securities Acts and the
SRO rules.
12. Suitability
Answer: A registrant's major concern in making investment recommendations. Unless a suitability exemp-
tion applies, all information about a client and a security must be analyzed to determine whether a particular investment is
suitable for a client.
13. Unsolicited Order
Answer: An order entered by a client where neither the client's IA or his/her dealer member recommended
the order.
14. Autorité des marchés financiers (Financial Services Authority) (AMF)
Answer: The body that administers the regulatory framework surrounding Québec's financial sector securities
sector.
, 15. Canadian Investor Protection Fund (CIPF)
Answer: A fund that protects investors against the insolvency of any dealer member.
16. Disclosure
Answer: One of the principles of securities regulation in Canada. This principle entails full, true and plain
disclosure of all material facts necessary to make reasoned investment decisions.
17. Financial Transactions Reports Analysis Centre of Canada (FINTRAC)
Answer: FINTRAC receives, analyzes, assesses and discloses financial intelligence on suspected money laundering,
terrorist financing, and threats to the security of Canada.
18. Integrated Market Enforcement Teams (IMETs)
Answer: An initiative of the RCMP and the federal
government to detect, investigate and deter capital markets fraud.
19. Joint Serious Offences Team ( JSOTs)
Answer: JSOT is an enforcement partnership between the OSC, the RCMP Financial Crime program and the
Ontario Provincial Police Anti-Rackets Branch. JSOT investigates and prosecutes serious violations of the law using
provisions of the Securities Act (Ontario) and Criminal Code.
20. Investment Industry Association of Canada (IIAC)
Answer: IIAC is a member-based, advocacy
association that advances the growth and development of the Canadian investment industry.
