Canadian Securities Course (CSC) Level 1 Practice Exam

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What is a retractable preferred share?

A type of preferred share that cannot be redeemed.
A share that allows for unlimited conversion options.
Shareholders can force the company to buy back the share for cash on a specified date.
A preferred share with elevated dividend payments.

The correct answer is: Shareholders can force the company to buy back the share for cash on a specified date.

A retractable preferred share is a type of preferred share that gives the shareholder the right to force the company to buy back the share for cash on a specified date. This feature provides the shareholder with the option to receive their original investment back at a predetermined future date, making it an attractive feature for investors looking for liquidity or protection of capital. This distinguishes retractable preferred shares from other types of preferred shares, making choice C the correct answer.