Canadian Securities Course (CSC) Practice Exam

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Which method is used by the Bank of Canada for distributing new issues of government marketable bonds?

Competitive tender
Negotiated offering
Government securities distributors (GSD)
Issued shares

The correct answer is: Competitive tender

The Bank of Canada uses a process called "competitive tender" to distribute new issues of government marketable bonds. This means that interested buyers place bids on the bonds, and the bonds are then allocated to those who bid the highest. This process ensures fair and efficient distribution of the bonds to interested parties. Option B, negotiated offering, refers to a direct negotiation between the issuer and a select group of buyers, which is not the method used by the Bank of Canada. Option C, Government Securities Distributors (GSD), is a network of financial institutions that participate in the distribution of government securities, but this is not the specific method used for distributing new issues. Option D, issued shares, is unrelated to bonds and refers to the creation and sale of stocks by a company.