Canadian Securities Course (CSC) Level 1 Practice Exam

What is a trust company?

1. Acts as a trustee in charge of corporate and individual assets

2. Provides loans to individuals and companies

3. Offers credit rating services to financial institutions

4. Manages real estate properties exclusively

The correct answer is: Acts as a trustee in charge of corporate and individual assets

A trust company primarily acts as a trustee, which means it is entrusted with managing assets on behalf of individuals, corporations, or other entities. This role involves overseeing various types of assets, including investments, property, and money, ensuring they are managed according to legal and fiduciary standards. Trust companies are responsible for safeguarding the assets, executing the terms of trust agreements, and making distributions to beneficiaries as outlined in those agreements. This function is essential in wealth management and estate planning, offering clients a way to ensure their assets are handled according to their wishes. The other options describe functions that may be performed by different types of financial institutions or companies but do not specifically capture the core role of a trust company. For instance, providing loans is characteristic of banks or credit unions, offering credit rating services relates to credit bureaus or rating agencies, and managing real estate properties aligns more closely with property management firms rather than the trust-focused role of a trust company.