CSI CSC2 Exam Dumps

A key characteristic of provincial savings bonds is that they can only be purchased by residents of the issuing province. This restriction differentiates them from other provincial bonds, which may be available to investors nationwide or internationally.

Other options:

Backed by provincial assets pledged as security: All provincial bonds are backed by the credit of the issuing government, not specifically by pledged assets.

Purchased at any time of the year: Provincial savings bonds are available only during specific sales campaigns.

Do not have redemption rules: Savings bonds often have specific redemption rules, unlike this statement.

Volume 1, Chapter 6: Fixed-Income Securities, section on 'Provincial and Municipal Bonds' explains the restrictions and features of provincial savings bonds.

At the end of the five-year term, if the issuer does not redeem the rate-reset preferred shares, the shareholder can choose to:

Continue holding the shares at the reset fixed rate.

Convert them into floating-rate preferred shares with rates tied to a benchmark (e.g., prime or LIBOR).

This conversion offers flexibility to the shareholder based on market conditions.

Why Other Options are Incorrect:

A . Exchange for a specified number of common shares: Rate-reset preferred shares do not have this feature.

B . Exchange for a fixed-rate preferred share: The fixed-rate component is reset, not exchanged.

C . Exchange for an unsecured bond: This is not a feature of rate-reset preferred shares.

Reference: CSC Volume 1, Chapter 8, 'Preferred Shares -- Rate-Reset Features' outlines the conversion options for rate-reset preferred shares.