Canadian Securities Course (CSC) Practice Exam

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What is an Escalating GIC known for in financial terms?

set up to retire a specific amount of bonds through purchases in the market, if they can be made at or below a stipulated price.
a short-term commercial draft sold at a discount.
the interest rate for these GICs increases over the term.
the investment for these GICs is evenly divided into multiple-term lengths.

The correct answer is: the interest rate for these GICs increases over the term.

An escalating GIC, or Guaranteed Investment Certificate, is a type of financial product where an investor deposits a certain amount of money and earns a fixed interest rate over a set period of time. The unique feature of an escalating GIC is that the interest rate increases over the term, meaning the investor earns more and more interest as time goes on. This sets it apart from the other options where the focus is on specific bond purchases, short-term drafts, and evenly divided investments. These other options do not have the increasing interest rate feature that makes an escalating GIC a desirable financial tool.