Canadian Securities Course (CSC) Practice Exam

What type of preferred shares entitles the holder to a fixed dividend for a predetermined amount of time after it becomes variable?

1. Convertible preferreds

2. Retractable preferreds

3. Delayed floater preferred

4. Foreign-pay preferreds

The correct answer is: Retractable preferreds

Retractable preferred shares are the type of preferred shares that entitle the holder to a fixed dividend for a predetermined amount of time after it becomes variable. This means that the holder is guaranteed a fixed dividend for a certain period of time, but after that time has elapsed, the dividend may change depending on the performance of the company. The other options, convertible preferred shares, delayed floater preferred shares, and foreign-pay preferred shares, do not have the same characteristics as retractable preferred shares. Convertible preferred shares can be converted into common shares at the discretion of the shareholder, delayed floater preferred shares have a floating dividend that is delayed for a certain period of time, and foreign-pay preferred shares are issued by foreign companies and may have different dividend structures. Therefore, these options are incorrect because they do not fit the criteria of having a fixed dividend that becomes variable after a certain period of time.