Master CSI CSC2 Exam with Reliable Practice Questions
Upgrade to PremiumWhat is one advantage of implementing indexing investing style?
Correct : B
Indexing is an investment strategy that tracks a benchmark index and is simple for investors to understand. This ease of understanding is one of its primary advantages.
Option A: Indexing does not provide preferential tax treatment for derivative-based income.
Option C: While low-cost, indexing does not offer an opportunity to outperform the market---it aims to match the market's performance.
Option D: Indexing is typically suited for long-term investing due to its emphasis on broad market exposure and passive management.
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An emerging Canadian company is exploring the possibility of using hot water springs to produce clear energy for remote rural communities. The company has strong human resource capital and few assets, and raised SI 20,000 through the Capital Pool Company program. Which option is best for this company to continue maximizing public exposure and raising capital?
Correct : A
For an emerging company with limited assets and innovative goals, crowdfunding is an excellent option to maximize public exposure and raise capital. Crowdfunding involves soliciting small investments from a large number of people, typically through online platforms, making it ideal for startups or innovative ventures like the use of hot water springs for clean energy.
Other options:
Escrowing shares: Typically used to restrict the sale of shares for a certain period, not for raising capital.
Offering a greenshoe option: Applies to stabilizing stock prices in an IPO or follow-on offering, not raising initial capital.
Filing disclosure documents with SEDAR+: Necessary for public companies but does not directly raise capital or increase exposure.
Volume 1, Chapter 12: Financing and Listing Securities, section on 'Capital Raising Options' covers crowdfunding as a method for startups to raise funds.
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What is a key characteristic of an actively managed product that might interest an investor?
Correct : B
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The XYZL mutual fund distributes realized capital gains of $1.50. What is the effect of this distribution?
Correct : B
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Which asset type is classified as a fixed-income asset for portfolio management purposes?
Correct : C
Fixed-income assets are characterized by predictable cash flows. Convertible bonds qualify because they have features of fixed-income securities (coupon payments and principal repayment) while also offering the option to convert into equity.
Money market securities (Option A) are short-term, high-liquidity instruments and typically not classified as fixed-income for long-term portfolio management purposes.
Preferred shares (Option B) are equity-like instruments with fixed dividend payments but lack the 'fixed-income' designation for portfolio management.
Bonds with less than one year to maturity (Option D) fall under money market classifications rather than fixed income.
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