Investment Products

The largest product-focused element on the CIRE. Covers equities (common, preferred, rights, warrants), fixed income (government, corporate, money market), pooled vehicles (mutual funds, ETFs, segregated funds, hedge funds, PPNs), and derivatives at a foundational level. Where non-finance candidates struggle most.

Rules tested:NI 81-101NI 81-102NI 81-104NI 41-101

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Common and preferred shares

Common: voting rights, residual claim, last in liquidation.
Preferred: fixed dividend, no maturity, paid before common in liquidation, usually non-voting.
Cumulative preferred: missed dividends accrue and must be paid before common dividends.
Restricted shares: non-voting, subordinate voting, or restricted voting.
DRIP: dividends used to buy more shares instead of cash.

Bonds and money market

Coupon based on face value, not market price.
Bond price and yield move in opposite directions.
YTM > coupon = discount bond. YTM < coupon = premium bond.
T-bills sold at discount, mature at par (no coupon).
Strip bonds: coupons removed; income taxed annually even though no cash received.
Eurobond: issued in a currency different from the market it's sold in.

Mutual funds (NI 81-101 / 81-102)

Fund Facts must be delivered at or before the time of order (pre-trade).
MER includes management fee, operating expenses, taxes. Trailing commissions disclosed separately.
DSC sales charges banned (post-2022). Front-end and no-load are the standard sales structures.
Series A, F, D, I: same fund, different fee structures for different investor types.
Switching within the same fund family at NAV is common and may be tax-deferred for corporate-class funds.

ETFs (NI 41-101 Part 3B)

ETF Facts delivered no later than 2nd business day after the trade.
Creation/redemption in kind via authorized participants keeps the price close to NAV.
Index ETFs vs active ETFs vs leveraged/inverse ETFs (the last reset daily, not for long-term holding).
Bid-ask spread is a real cost, in addition to MER.

Segregated funds and PPNs

Segregated funds: insurance contract, with maturity and death benefit guarantees (75% or 100%).
Creditor protection if named beneficiary is a spouse, child, parent, or grandchild.
PPN (Principal-Protected Note): structured product. Principal guaranteed at maturity, return linked to an underlying.
Hedge funds and alternative funds (NI 81-104): higher fees, lower regulation, accredited investor thresholds.

Derivatives and structured products

Option contract = 100 shares. Call breakeven = strike + premium. Put = strike − premium.
Futures: standardized, exchange-traded, daily marked-to-market.
Forwards: customized, OTC, settled at expiry.
Swaps: exchange of cash flows. Interest rate, currency, credit default swaps.
Structured notes with embedded derivatives: read the prospectus carefully for downside protection mechanics.

Rights and warrants

Rights: short-term (usually 4–6 weeks), issued to existing shareholders, subscription price < market.
Rights stop trading at noon on expiry day (TSX & TSXV).
Ex-rights formula (1 right): (S − X) ÷ n. Cum-rights: (S − X) ÷ (n + 1).
Warrants: long-term (3–5 years), issued by the company, often attached to debt as a sweetener.

Exam traps

Trap:Calculating coupon income from market price instead of face value.Fix:Coupon = par × rate. Market price affects yield, not the coupon dollar amount.
Trap:Treating leveraged/inverse ETFs as buy-and-hold instruments.Fix:They reset daily. Hold for one day at most; compounding decay over longer periods.
Trap:Missing Fund Facts pre-trade delivery requirement.Fix:Fund Facts must arrive AT OR BEFORE order entry. ETF Facts has a T+2 delivery window — different rule.
Trap:Confusing rights with warrants on tenor.Fix:Rights = 4–6 weeks. Warrants = 3–5 years.

Memory hooks — Element 7

Ciroexam · CIRE 2026

→Coupon = face value × rate (not market price)
→YTM > coupon = discount
→Option contract = 100 shares
→Call BE = strike + premium
→Fund Facts pre-trade · ETF Facts T+2
→Rights = SHORT term (weeks) · Warrants = LONG term (years)
→Seg fund = insurance contract with creditor protection