Canadian Securities Course (CSC) Practice Exam

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Practice for the Canadian Securities Course (CSC) exam with our quiz. Test your knowledge with multiple-choice questions. Be prepared for the real exam!

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What is the purpose of a delayed floater preferred share?

To protect against interest rate increases
To pay no dividend until a future maturity date
To accumulate dividends from year to year until paid
To entitle the holder to a fixed dividend for a predetermined amount of time

The correct answer is: To entitle the holder to a fixed dividend for a predetermined amount of time

A delayed floater preferred share is a type of preferred share that offers a fixed dividend for a specific duration of time. This means that the holder of this share is entitled to receive a stable, predetermined dividend amount for a set period of time. This can be attractive for investors who are seeking a steady income stream, as they can count on receiving a consistent dividend for a specific period of time. Option A is incorrect because a delayed floater preferred share does not protect against interest rate increases. Interest rates can still fluctuate during the predetermined time period for the fixed dividend. Option B is incorrect because a delayed floater preferred share does not pay no dividend until a future maturity date. It still pays a fixed dividend for a set duration. Option C is incorrect because a delayed floater preferred share does not accumulate dividends from year to year until paid. It only provides a fixed dividend for a predetermined period of time.