Canadian Securities Course (CSC) Level 1 Practice Exam

What is a Right?

1. A right to own real estate

2. Privilege to buy goods at a discounted price

3. Privilege granted to an existing shareholder to buy more shares

4. Financial incentive for employees

The correct answer is: Privilege granted to an existing shareholder to buy more shares

A right in the context of investments refers to the privilege granted to an existing shareholder to purchase additional shares in a company at a specific price within a certain timeframe. This right allows shareholders to maintain their ownership percentage in the company by buying more shares before they are offered to the public. This right is commonly known as a "rights offering" or "preemptive rights." The other options mentioned are not accurate definitions of a 'right' in the context of securities. Option A refers to ownership of real estate, which is not specifically related to the concept of rights in securities. Option B refers to a discount on goods, which is not typically associated with financial markets or investments. Option D mentions a financial incentive for employees, which is related to compensation or benefits in the workforce, but not relevant to the concept of rights in investments.