Canadian Securities Course (CSC) Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

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What is a feature of traditional bonds compared to stocks?

Bonds generally provide ownership in a company

Bonds usually have a lower risk than stocks

Bonds generally have a lower risk than stocks, making them a more stable investment choice for many investors. This stems from the nature of bonds, which are fixed-income securities; they provide regular interest payments and return the principal at maturity, making them less volatile compared to stocks. In terms of priority during a company's liquidation, bondholders are repaid before equity shareholders, adding to their overall safety.

When examining the other options, bonds do not provide ownership in a company; purchasing bonds means you are lending money to the issuer, not buying a stake in the company. Additionally, bonds typically offer lower potential returns than stocks, as equities have a higher risk-and-return profile. Lastly, bonds do indeed pay interest, which is a defining characteristic of these instruments. Therefore, the characteristic of bonds being lower risk than stocks stands out as the correct feature in the comparison.

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Bonds offer potential for higher returns than stocks

Bonds do not pay interest

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