Canadian Securities Course (CSC) Level 1 Practice Exam 2025 – All-In-One Guide to Master Your Exam Prep!

Question: 1 / 400

Which of the following is not considered one of the determinants of interest rates?

Demand and supply of money

Default risk

The correct answer is the option related to default risk, as this is not considered a primary determinant of interest rates in the broader economic context. Interest rates are primarily influenced by macroeconomic factors such as the demand and supply of money, which establishes the base currency rate in the market; central bank credibility, which affects public and investor confidence in monetary policy and thus influences borrowing costs; and foreign demand for bonds, as international investors impact domestic interest rates through their purchasing activities. While default risk is an important factor in determining the specific yield on particular bonds or loans, it does not broadly affect interest rates across the market in the way that the other factors do. Hence, it's relevant to individual securities but not fundamental to the overall interest rate levels.

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Central bank credibility

Foreign demand for bonds

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