Canadian Securities Course (CSC) Level 1 Practice Exam

What are fixed-income securities (debt securities)? Give an example of one.

1. Stocks

2. Bonds

3. Treasury Bills

4. Preferred Shares

The correct answer is: Bonds

Fixed-income securities, also known as debt securities, are investments that provide a fixed return in the form of regular interest payments until maturity, where the initial investment is returned to the investor. One example of a fixed-income security is a bond. Bonds are issued by corporations or governments to raise capital and typically pay a fixed rate of interest to the bondholder until the bond matures. Unlike stocks, which represent ownership in a company, bonds represent a loan from an investor to the issuer. Treasury Bills are short-term debt securities issued by the government, while preferred shares represent ownership in a company and do not have a fixed maturity date like bonds do.