Canadian Securities Course (CSC) Level 2 Practice Exam

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Prepare for the Canadian Securities Course (CSC) Level 2 Practice Exam. Study with multiple choice questions and detailed explanations. Ace your exam with comprehensive practice tests!

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What is a characteristic of high yield fixed income investments according to the text?

  1. Low default risk

  2. High liquidity

  3. Non-investment grade

  4. Government-issued

The correct answer is: Non-investment grade

High yield fixed income investments, often referred to as junk bonds, are characterized primarily by their non-investment grade status. These bonds are rated below the lowest investment grade by major rating agencies, indicating a higher risk of default compared to investment-grade bonds. Investors are typically attracted to high yield investments because they offer the potential for higher returns to compensate for the increased risk associated with their credit quality. The characterization of these bonds as non-investment grade reflects their higher likelihood of default, which is fundamental to understanding their investment profile and risk-reward dynamics.

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