CSC Exam 2 — CSI Canadian Securities Course (CSC) Exam Blueprint

How to Use This Exam Blueprint

This independent checklist is for candidates preparing for CSC Exam 2 in the CSI Canadian Securities Course (CSC) offered by the Canadian Securities Institute. Use it as a practical study map after you have read the course material. It is not an official weighting guide and does not replace current Canadian Securities Institute materials.

For each topic area, ask:

• Can I recognize the concept in a client scenario?
• Can I choose the most suitable product, account approach, or recommendation?
• Can I explain the risk, cost, tax, disclosure, or documentation issue?
• Can I avoid common traps that make an answer look attractive but unsuitable?

Topic-area readiness table

Core “can you do this?” checklist

Use this section as a fast readiness audit. Any unchecked item should become a focused review task.

Portfolio and client-fit skills

• Identify a client’s primary objective: income, growth, preservation of capital, liquidity, tax efficiency, or a combination.
• Separate risk tolerance from risk capacity.
• Explain why a long time horizon may allow more volatility but does not override a client’s stated risk tolerance.
• Match asset allocation to objectives, constraints, and required liquidity.
• Recognize when diversification reduces unsystematic risk but cannot eliminate market risk.
• Explain how correlation affects portfolio volatility.
• Identify when rebalancing may be appropriate after market movement or a change in client facts.
• Distinguish strategic asset allocation from shorter-term tactical shifts.
• Recognize when a recommendation is unsuitable because it solves one objective while ignoring another.

Product comparison skills

• Compare mutual funds, ETFs, individual securities, managed accounts, and structured products by risk, cost, liquidity, transparency, and tax treatment.
• Explain the difference between a fund’s stated objective and the investor’s actual outcome.
• Recognize how fees and expenses reduce investor returns.
• Explain why a distribution is not the same as investment performance.
• Identify how an ETF can trade at a premium or discount to its underlying net asset value.
• Recognize liquidity risk in products that do not trade continuously or that have redemption restrictions.
• Identify credit risk in structured notes or guaranteed-style products when the guarantee depends on an issuer.
• Explain why principal protection, if present, may come with trade-offs such as limited upside, maturity restrictions, or opportunity cost.
• Distinguish product risk from suitability risk.

Tax and after-tax thinking

• Distinguish interest income, dividend income, and capital gains in a Canadian investment context.
• Explain why after-tax return may matter more than pre-tax yield for a taxable investor.
• Calculate a simple capital gain or loss using proceeds, adjusted cost base, and selling costs.
• Explain adjusted cost base at a high level, including why reinvested distributions can matter.
• Recognize that tax treatment may differ between registered and non-registered accounts.
• Identify when tax considerations should be referred to a qualified tax professional rather than answered definitively.
• Avoid choosing an investment solely for tax reasons if the investment risk is unsuitable.

Retail advisory process and documentation

• Identify the purpose of KYC information.
• Identify the purpose of KYP due diligence.
• Connect KYC and KYP to suitability.
• Recognize when a material change in client circumstances requires updated information.
• Identify red flags in incomplete, inconsistent, or outdated client documentation.
• Distinguish a recommendation from an order-taking scenario.
• Recognize conflicts of interest and the need for clear disclosure and appropriate handling.
• Identify when a client complaint or concern should be escalated through the proper process.

Portfolio management and investment policy checklist

Investment analysis checklist

Fundamental and company analysis

Be ready to interpret what a ratio or statement item means rather than merely define it.

Technical analysis

• Explain that technical analysis uses price, volume, and market behaviour.
• Identify trend, support, resistance, and momentum concepts.
• Recognize that technical signals are not guarantees.
• Distinguish technical analysis from fundamental analysis.
• Avoid using a chart signal as the only reason for a recommendation when client suitability is missing.

Managed product checklist

Mutual funds

ETFs

Segregated funds and insurance-linked products

• Identify insurance-linked features where applicable.
• Distinguish investment risk from insurance or guarantee features.
• Recognize that guarantees may depend on conditions such as holding period, death benefit, or maturity terms.
• Consider fees, liquidity, creditor protection concepts, estate-planning features, and suitability.
• Avoid assuming “guaranteed” means no risk, no cost, or immediate liquidity.

Alternative and specialty managed products

• Identify leverage, short selling, derivatives, concentration, illiquidity, valuation complexity, and manager risk.
• Recognize when a product requires more sophisticated risk understanding.
• Ask whether the client can tolerate loss, illiquidity, complexity, and fee drag.
• Distinguish diversification benefit from unfamiliar-product risk.
• Avoid recommending complex products to solve simple needs unless the client facts justify them.

Structured product decision checks

Structured products are often tested through payoff logic and suitability judgment.

Structured-product scenario cues

• If the client needs emergency liquidity, be cautious with long maturity or limited redemption.
• If the client wants full equity upside and dividends, a capped or linked note may not match expectations.
• If the client says “no risk,” check whether issuer risk, opportunity cost, liquidity risk, and inflation risk remain.
• If the payoff depends on an index level at maturity, identify whether interim performance matters.
• If the recommendation depends on tax treatment, confirm that the scenario provides enough information.

Tax readiness checklist

Core tax logic

• Identify interest income as generally different from dividend income and capital gains.
• Recognize that tax efficiency can vary by product and account type.
• Explain why frequent trading can create taxable events in non-registered accounts.
• Explain why mutual fund or ETF distributions can create taxable income even if cash is reinvested.
• Identify when capital losses may be relevant to capital gains.
• Explain why adjusted cost base matters for calculating taxable capital gains or losses.
• Recognize that registered plans can change timing or treatment of taxation.
• Avoid giving specific tax advice when the correct response is to refer to a tax professional.

Calculation checks

Know the concepts behind these formulas and be able to use them in simple scenarios.

\[ \text{Total return} = \frac{\text{Income received} + \text{Ending value} - \text{Beginning value}}{\text{Beginning value}} \]\[ \text{Portfolio return} = \sum (\text{weight of asset} \times \text{return of asset}) \]\[ \text{Capital gain or loss} = \text{Proceeds of disposition} - \text{Adjusted cost base} - \text{Selling costs} \]\[ \text{NAV per unit} = \frac{\text{Total fund assets} - \text{Fund liabilities}}{\text{Units outstanding}} \]\[ \text{Approximate real return} \approx \text{Nominal return} - \text{Inflation rate} \]

Tax traps

Fee-based account and compensation checklist

Retail client scenario decision points

Use this table to practise choosing the best answer when more than one option seems plausible.

Institutional client checklist

Institutional questions often test mandate discipline and governance rather than retail-style conversations.

• Identify the purpose of an investment policy statement.
• Distinguish fiduciary or governance considerations from individual investor preferences.
• Recognize constraints such as liquidity needs, spending requirements, liabilities, legal limits, and risk budgets.
• Match portfolio strategy to the institution’s mandate.
• Identify when performance should be measured against an appropriate benchmark.
• Recognize that institutional suitability depends on mandate, policy, and governance process.
• Avoid applying retail assumptions automatically to pension plans, foundations, endowments, corporations, or other institutions.

Compliance, ethics, and conduct checks

Common weak areas and traps

Final-week checklist

Three to five days before the exam

• Re-read your weakest product comparison notes: mutual funds, ETFs, structured products, and managed accounts.
• Drill tax treatment at the concept level: interest, dividends, capital gains, ACB, distributions, and registered vs non-registered logic.
• Practise suitability scenarios where the client facts conflict with the product’s risk or liquidity.
• Review portfolio terminology: diversification, correlation, asset allocation, rebalancing, strategic vs tactical decisions.
• Review common documents and concepts: KYC, KYP, suitability, disclosure, conflicts, investment policy statements.
• Redo missed questions and write one sentence explaining why the correct answer is better than the tempting answer.

Final 24 hours

• Do not try to learn every detail from scratch.
• Review formulas and calculation patterns you have already practised.
• Review scenario traps: unsuitable complexity, tax-only recommendations, liquidity mismatch, and misleading guarantees.
• Skim your error log and group mistakes by cause: product confusion, tax logic, client-fit error, or reading too quickly.
• Practise a short mixed set under timed conditions.
• Stop and rest once accuracy begins to fall.

Practical next step

Turn each unchecked item into a small practice task: one concept review, two scenario questions, and one written explanation of the decision rule. Then complete mixed practice that forces you to switch between products, tax, portfolio logic, and suitability judgment, because CSC Exam 2 readiness depends on applying the topic map, not just recognizing definitions.