Investment VehiclesQuestion 42 of 110
A Guaranteed Investment Contract (GIC) issued by an insurer is most similar in risk profile to which of the following?
a.A speculative growth stock
b.A leveraged commodity future
c.A fixed-income instrument dependent on the insurer's creditworthiness
d.A tax-free municipal bond
Explanation
A GIC promises a fixed return over a set period and behaves like a fixed-income instrument, with its safety tied to the issuing insurer's financial strength. It carries credit risk of the insurer rather than market volatility of equities. It is neither speculative nor tax-exempt like a municipal bond.
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