Canadian Securities Course (CSC) Level 1 Practice Exam

What is financing (Underwriting)?

1. A process of borrowing money from stakeholders

2. Selling shares in a company to the public

3. Process to raise capital by governments and corporations

4. Obtaining loans from financial institutions

The correct answer is: Process to raise capital by governments and corporations

Financing (Underwriting) is the process of raising capital by governments and corporations. Underwriting involves the sale of new securities to investors, such as stocks and bonds, to raise funds for the issuer. This process helps companies and governments generate the necessary capital for their operations or project financing. Therefore, option C is the correct answer as it accurately describes the concept of financing through underwriting. Options A, B, and D do not fully capture the essence of financing (Underwriting). Borrowing money from stakeholders (Option A) and obtaining loans from financial institutions (Option D) are forms of debt financing, while selling shares in a company to the public (Option B) refers to issuing equity securities through an initial public offering (IPO) rather than the underwriting process.