Canadian Securities Course (CSC) Level 2 Practice Exam

What is a characteristic of labor-sponsored venture capital corporations (LSVCC)?

1. Funds sponsored by labor organizations to provide for small/medium emerging companies.

2. Federal tax credit available on max of $5000, carried forward or back.

3. Purchased through REIT or RIF.

4. Low-risk, steady returns.

The correct answer is: Funds sponsored by labor organizations to provide for small/medium emerging companies.

The choice that accurately describes a characteristic of labor-sponsored venture capital corporations (LSVCC) is that they are funds sponsored by labor organizations to support small and medium-sized emerging companies. LSVCCs play a vital role in the finance ecosystem by focusing specifically on the growth and development of businesses that may struggle to access traditional sources of capital. This can stimulate job creation and economic growth in various sectors, aligning with the interests of the labor organizations that sponsor them. The federal tax credit, although relevant, has specific conditions and limitations; it is not inherently a defining characteristic of LSVCCs. Additionally, LSVCCs are not typically purchased through real estate investment trusts (REITs) or registered retirement income funds (RIFs), as these are fundamentally different investment vehicles. Lastly, LSVCC investments generally carry higher risk due to the nature of the businesses they invest in, which contrasts with the notion of low-risk, steady returns typically associated with more conservative investments.