Canadian Securities Course (CSC) Level 1 Practice Exam

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What is a soft retractable?

A type of preferred share that can only be redeemed in cash.
A share that loses value over time based on market conditions.
Shares that can only be converted into common shares.
Refers to preferred shares where the redemption value may be paid in cash or in common shares.

The correct answer is: Refers to preferred shares where the redemption value may be paid in cash or in common shares.

A soft retractable refers to preferred shares where the redemption value may be paid in cash or in common shares. This option is correct because it accurately defines what a soft retractable is in the context of preferred shares. Options A, B, and C are incorrect because they do not accurately describe what a soft retractable is. A soft retractable is not limited to being redeemed only in cash (Option A), nor does it lose value over time based on market conditions (Option B). It also does not refer to shares that can only be converted into common shares (Option C). Option D correctly identifies the unique characteristic of a soft retractable preferred share, making it the correct answer in this case.