Exam CIFC Topic 1 Question 145 Discussion

Actual exam question for IFSE Institute's CIFC exam
Question #: 145
Topic #: 1

For what reason do different entities have securities created and sold?

A. Government debt is reduced due to the capital that is received from investors when their securities are purchased. B. When common shares are initially sold, the capital raised will increase the issuing corporation's retained earnings. C. Governments can address financial needs and support initiatives when securities are first sold. D. The issuance of securities is a method used by corporations to redistribute their wealth to investors to lower taxes.

Suggested Answer: C Vote an answer

Explanation
One of the main reasons why different entities have securities created and sold is to raise funds for various purposes. Governments, for example, can issue securities such as bonds or treasury bills to finance public spending, such as infrastructure, education, health care, or social programs. By selling securities to investors, governments can borrow money at a lower cost than other sources of funding, and can also stimulate the economy and create jobs12 References = Canadian Investment Funds Course (CIFC) - Module 2: Investment Products - Section 2.1:
Money Market Instruments3 and web search results from search_web(query="reasons for issuing securities")12
3: https://www.ifse.ca/wp-content/uploads/2021/08/CIFC-Module-2.pdf

by Ralap at Apr 24, 2024, 12:42 PM

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