Canadian Securities Course (CSC) Level 2 Practice Exam 2025 - Free CSC Level 2 Practice Questions and Study Guide

Question: 1 / 400

What characterizes small to mid-cap equity funds in terms of their volatility, dividend issuance, and market ranking?

High risk, high dividends, top 100 companies

Low risk, high dividends, smaller companies

High risk, no dividends, top 100 companies

High risk, no dividends, smaller companies

Small to mid-cap equity funds are known for being higher risk investments compared to large-cap funds due to the smaller size and potentially less established nature of the companies they invest in. They typically do not issue dividends as frequently as larger, more established companies, as these smaller companies may prefer to reinvest any profits back into the business for growth rather than paying out dividends to shareholders. Additionally, these funds focus on investing in smaller companies outside the top 100, making option D the correct choice. Options A, B, and C can be ruled out as they do not accurately characterize small to mid-cap equity funds in terms of their volatility, dividend issuance, and market ranking.

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