Canadian Securities Course (CSC) Level 1 Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Canadian Securities Course Level 1 Exam with our comprehensive study tool. Use flashcards and multiple choice questions to hone your skills. Fully understand each topic with hints and explanations. Get ready to excel in your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What type of derivatives can be customized?

Energy Products.
Grains and oil seeds.
OTC Derivatives.
Equities.

The correct answer is: OTC Derivatives.

The correct answer is indeed OTC Derivatives. Over-the-counter (OTC) derivatives are financial contracts that are traded directly between two parties, without a centralized exchange or intermediary. This allows for significant customization of the terms of the contract, including the notional amount, underlying asset, expiration date, and payout structure. Because they are negotiated directly between the parties, they can be tailored to fit the specific needs and risk profiles of the involved entities. In contrast, derivatives that are traded on standardized exchanges typically have set terms and conditions, which limits the ability to customize them. Therefore, while options in other choices may relate to financial markets, they do not inherently offer the same level of customization that OTC derivatives provide.