Canadian Securities Course (CSC) Level 2 Practice Exam

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Prepare for the Canadian Securities Course Level 2 Exam with our comprehensive quiz. Assess your knowledge with multiple choice questions designed to test your understanding of the Canadian securities industry. Get the insights you need to achieve success!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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Which investment type typically holds the highest expected return according to the provided text?

Bonds
Debentures
Derivatives
T-Bills

The correct answer is: Derivatives

Derivatives are financial instruments whose value is derived from the performance of underlying assets, such as stocks, bonds, currencies, or market indexes. They can take various forms, including options, futures, and swaps. Derivatives are often used for hedging or speculative purposes and can offer significant leverage. Because of this leverage and the inherent risks involved, they typically have the potential for the highest expected returns among various investment types. While bonds, debentures, and T-Bills are generally considered lower-risk investments with more stable, predictable returns, they do not usually offer the same level of potential returns as derivatives. Bonds and debentures, which are debt securities, offer fixed interest payments, and T-Bills are short-term government securities with lower yields due to their low risk. Therefore, in the context of your question, derivatives stand out as the investment type with the highest expected return.