Canadian Securities Course (CSC) Level 2 Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

The choice of passive investment as the correct answer reflects an approach focused on replicating the performance of a specific index. This investment strategy involves buying a representative sample of securities that make up the index, such as the S&P 500 or the TSX Composite, with the intent of achieving returns that mirror those of the index over time.

Passive investment is typically characterized by lower management fees, less frequent trading, and a long-term orientation as it does not attempt to outperform the market through active trading or stock selection. Instead, it emphasizes the belief that markets are efficient and that long-term investment in a broad market index will yield consistent returns.

In contrast, strategic investment often involves asset allocation and tactical shifts based on market conditions, while growth and value investing entail selecting individual securities based on specific criteria related to company performance or valuation. These other approaches focus more on potentially outperforming an index rather than simply matching its performance, which distinguishes them from the passive investment strategy.