CSC1 Core Readiness Cheat Sheet
Review market roles, investment cash flows, portfolio calculations and client evidence before your next Core Readiness practice set.
Use this reference to explain a decision before looking at the answer options. It supports Core Readiness practice ; it does not replace CSI’s course materials or supply an official exam formula sheet.
Industry: follow the obligation
| Distinction | Deciding evidence |
|---|---|
| Primary issue vs secondary trade | Newly issued securities can raise capital for the issuer. An ordinary resale transfers an existing security and pays the seller. |
| Execution vs settlement | Execution establishes the trade. Clearing determines obligations. Settlement discharges the payment and delivery obligations. |
| Issuer vs dealer duties | Issuer disclosure and a dealer’s supervision are separate obligations. Identify the actor and the applicable rule. |
| Open-order correction vs completed-trade error | Establish the execution status and the employee’s authority before choosing a correction. Preserve records and use the firm’s authorized process. |
A diagram can help trace who owns an asset, who owes a payment and who receives the proceeds. A household’s claim against a bank is different from a bond held by that bank.
Technical: choose the right base
| Calculation | Working rule |
|---|---|
| Annual coupon cash | Face amount × annual coupon rate |
| Current yield | Annual coupon cash ÷ current market price; this is not yield to maturity |
| Holding-period return | (Cash income + ending value − initial value) ÷ initial value, for a period without intervening external cash flows |
| Portfolio return | Sum of beginning weights × component returns, when there are no intervening cash flows or rebalancing |
| Working capital | Current assets − current liabilities |
| Call intrinsic value | Greater of zero and underlying price − strike; multiply by the contract quantity for the position total |
Example: A bond with $25,000 face value and a 4.8% annual coupon pays $1,200 per year. Paying $24,000 for it does not change those contractual coupons.
Income is not total return. A distribution can include return of capital, and an investment’s market value can fall while it pays cash. Include both cash flows and value changes when measuring economic return.
Product wrappers matter. Mutual fund units give exposure through a pool; they do not give the investor direct control over each portfolio security. ETF market prices can differ from NAV. A maturity guarantee has conditions, a specified date and a guarantor whose ability to pay matters.
Client: connect each fact to a decision
- Separate the client’s objective from a product they mention.
- Establish the amount, timing and accessibility of each cash need.
- Distinguish willingness to accept volatility from financial capacity to bear a loss.
- Compare suitable choices using costs, risks, liquidity, features and the client’s priorities.
- Reassess when material circumstances change and document the basis for the recommendation.
A client can have several horizons in one account. Money needed for tuition next year and money for retirement in 20 years should not inherit the same horizon merely because the client calls themselves a long-term investor.
Preliminary intake information can support a registered representative’s work. It does not replace the representative’s responsibility for substantive client discovery and suitability. Keep insurance, legal and tax work within the relevant professional’s authority.
Turn a mistake into a review task
After each missed or guessed answer, identify whether you used the wrong actor, amount, date, claim, or client constraint. Then explain why each alternative fails under the stated facts. Use the free preview to practise this process, or return to Finance Prep for another set.