What is aGIC? Why are rates on GICs higher than those on savingsaccounts? What factor would most affect your choice of maturity date on aGIC?

What is aGIC?

A.

A GIC is a cheque written on behalf of an individual that will be charged against alarge, well-known financial institution or credit cardsponsor's account.

B.

A GIC is ashort-term tomedium-term, high-quality debt security issued by the Government of Canada.

C.

A GIC is an instrument issued by a depository institution that specifies a minimuminvestment, an interestrate, and a maturity date.

D.

A GIC is an account that pools money from individuals and invests in securities that haveshort-term maturities, such as one year or less.

Why are rates on GICs higher than those on savingsaccounts?

A.

Rates are higher because there is less risk with GICs.

B.

Rates are higher to compensate investors for tying up their funds for a specified period of time.

C.

Rates are higher because the law requires it.

D.

Rates are higher to determine if higher interest rates will attract more customers.

What factor would most affect your choice of maturity date on aGIC?

A.

The issuing bank

B.

The desired interest rate

C.

The date of issue

D.

The need for liquidity