Canadian Securities Course (CSC) Level 1 Practice Exam

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What is a direct investment?

Purchasing stocks on the stock market
Investing in a mutual fund
Buying real estate property
Starting a small business

The correct answer is: Buying real estate property

A direct investment refers to investing in physical assets such as real estate property. This involves the investor purchasing buildings, land, or any tangible property directly rather than investing in securities such as stocks or mutual funds. Direct investments give the investor more control over their investment decisions and the ability to influence the performance of the asset. In contrast, purchasing stocks on the stock market (Option A) involves buying ownership in a company but does not give direct ownership of the actual assets. Investing in a mutual fund (Option B) involves pooling money with other investors to invest in a diversified portfolio managed by professionals. Starting a small business (Option D) involves establishing and running a business entity rather than investing in an existing asset.