When an investor or portfolio manager adheres to the belief in market efficiency-specifically the strong form of theEfficient Market Hypothesis (EMH)-it implies that all information (public and non-public) is fully reflected in security prices. This belief diminishes the value of active investment strategies, such as fundamental or technical analysis, as these approaches presume the possibility of identifying undervalued or overvalued securities.
As such, the logical approach in this scenario would be to adopt apassive investment strategy. This includes constructing a portfolio ofexchange-traded funds (ETFs)or index funds that replicate the performance of a broad market index, such as the S&P/TSX Composite Index. A passive approach aligns with the principle of market efficiency, as it avoids attempts to outperform the market, which are considered futile under the EMH.
References:
* Volume 2, Chapter 13: Fundamental and Technical Analysis, Efficient Market Hypothesis,Canadian Securities Course.

The shares held by institutional investors, along with other shares available for trading by the public, are referred to as thepublic float shares. These are the issued shares of a company that are actively traded in the market, excluding restricted shares held by insiders or strategic investors.
Other options:
* Issued shares: Includes all shares a company has issued, including restricted shares.
* Outstanding shares: Includes all shares held by all shareholders, including restricted shares and shares not available for trading.
* Market capitalization shares: Not a term used to describe shares; market capitalization is a measure of a company's total value based on its stock price and outstanding shares.
References:
* Volume 1, Chapter 8:Equity Securities, section on "Public Float and Market Capitalization" explains the concept of public float shares.

Abusiness trusttypically acquires the operating assets of businesses such asrestaurants, which generate predictable and steady cash flows. Business trusts focus on distributing income to unitholders, and restaurant operations align well with this goal due to their recurring revenue models.
* Explanation of Options:
* A. Senior Housing: More common for real estate investment trusts (REITs), not business trusts.
* B. Restaurants: Correct. Restaurants are suitable for business trusts because of their stable cash flow potential.
* C. Industrial Rentals: Typically under REITs, not business trusts.
* D. Shopping Centres: Also more commonly associated with REITs.
References:
* CSC Volume 2, Chapter 22: Business trusts and the types of operations they typically invest in.

An interest rate forward agreement (FRA) is an over-the-counter (OTC) derivative contract. Unlike exchange- traded derivatives, OTC contracts are not centrally cleared, meaning there is no intermediary to guarantee performance. This increases counterparty (default) risk, making FRAs inherently riskier than exchange-traded contracts.
* A. Individual investor buying shares on an exchange during the ex-rights period: This is a standard transaction involving equity securities, not derivatives, and carries no default risk.
* C. Exchange-traded equity option contract between an individual investor and a dealer: Exchange- traded derivatives are backed by a clearinghouse, which mitigates default risk.
* D. Individual investor entering a futures contract with an institutional investor: Futures contracts are also exchange-traded and centrally cleared, reducing default risk.
Reference:CSC Volume 1, Chapter 10, "The Role of Derivatives - Counterparty Risks in OTC Contracts" explains the higher default risk associated with OTC derivatives like FRAs.