Canadian Securities Course (CSC) Practice Exam

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How does an escrow arrangement contribute to market stability?

  1. By promoting speculative trading

  2. By tying the value of shares to the property

  3. By allowing early share release to select shareholders

  4. By encouraging rapid share turnover

The correct answer is: By tying the value of shares to the property

An escrow arrangement helps contribute to market stability by tying the value of shares to the property. This means that the value of the shares are based on the underlying property, making it less susceptible to market speculation and volatility. Options A, C, and D are all incorrect because they do not contribute to market stability but rather can potentially disrupt it. Promoting speculative trading, allowing early share release, and encouraging rapid share turnover can all create artificial demand and fluctuations in the market.

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