Canadian Securities Course (CSC) Practice Exam

Blue chip stocks are often viewed as a safer investment due to their established history of reliability, strong performance, and stability. These companies typically have a long track record of financial health, consistent dividend payments, and a significant market presence, which contributes to investor confidence. Investors in blue chip stocks generally expect lower volatility and risk compared to other types of stocks, making them appealing for conservative portfolios.

In contrast, penny stocks are characterized by their lower price and often lower liquidity, which can lead to higher volatility and risk. Growth stocks, while they have the potential for substantial price appreciation, often do not pay dividends and can be more susceptible to market fluctuations. Speculative stocks carry an even higher risk, as they are based on the potential future success of newer or unproven companies, leading to significant variability in prices and potential losses. Overall, blue chip stocks are distinguished by their stability and reliability, making them a favored choice for investors seeking safer investment options.