Canadian Securities Course (CSC) Practice Exam 2026 – The Comprehensive All-in-One Guide to Exam Success!

Question: 1 / 400

What is the main feature of retractable preferred shares?

They provide a higher dividend yield than common shares

They protect against interest rate increases

They can be converted into common stock

They can force the company to buy them back

A - While it is true that preferred shares often offer higher dividend yields than common shares, this is not a defining feature of retractable preferred shares. Other types of preferred shares can also provide higher dividends than common shares.

B - Retractable preferred shares do not protect against interest rate increases. This feature is often associated with adjustable-rate preferred shares.

C - The ability to convert into common stock is a feature of convertible preferred shares, but not necessarily retractable preferred shares.

D - This is the correct answer. Retractable preferred shares give the shareholder the right to force the company to buy back their shares at a predetermined price, providing a form of protection and exit strategy for investors. This is the main feature that sets retractable preferred shares apart from other types of preferred shares.

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