Canadian Securities Course (CSC) Level 1 Practice Exam

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What is an indirect investment?

Investing in government bonds
Acquiring a personal loan
Trading commodities futures
Depositing money in a savings account

The correct answer is: Depositing money in a savings account

An indirect investment refers to an investment made through financial intermediaries or structures rather than investing directly in the underlying assets. In this context, depositing money in a savings account can be seen as a form of indirect investment. When you deposit funds into a savings account, you are not directly purchasing a financial asset; instead, you are providing funds to a financial institution, which then uses those funds to make loans or invest in various financial products, thereby potentially earning a return for you. The other options represent different forms of direct investment or financial actions. For example, investing in government bonds involves purchasing the bonds directly, while trading commodity futures entails direct engagement with the commodities market. Acquiring a personal loan also does not involve investing; rather, it is a form of borrowing. Thus, the essence of indirect investment lies in its reliance on intermediaries to manage and grow the invested funds.