Canadian Securities Course (CSC) Practice Exam

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What type of preferred share provides an opportunity for gain on foreign exchange if the currency is strong?

  1. Buy-in

  2. Conversion preferreds

  3. Deferred preferred shares

  4. Foreign-pay preferreds

The correct answer is: Foreign-pay preferreds

A foreign-pay preferred share is a type of preferred share that provides an opportunity for gain on foreign exchange when the currency is strong. This is because these shares are paid in the currency of the country where the company is located, so when the value of that currency increases, the value of the shares also increases. The other options, such as buy-in, conversion preferreds, and deferred preferred shares, do not necessarily have a direct correlation to foreign currency and therefore do not offer the same opportunity for gain on foreign exchange.

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