Question

Monique, a Quebec resident, is thinking of buying a 7-year GIC from a financial institution that offers investor or deposit insurance protection. Select the financial institution from which she should purchase the GIC.

1) A chartered bank, covered by CDIC.
2) A mutual fund company covered by the IPC.
3) An investment dealer, covered by the CIPF.
4) An insurance company covered by the OBSI.

Answer 1

Monique should purchase the 7-year GIC from a chartered bank that is covered by the CDIC to ensure she has deposit insurance for her investment.

Step-by-step explanation:

If Monique, a Quebec resident, is considering purchasing a 7-year Guaranteed Investment Certificate (GIC) and is interested in an institution that offers investor or deposit insurance, she should opt for a 1) A chartered bank, covered by the Canada Deposit Insurance Corporation (CDIC). The CDIC is a Canadian federal crown corporation which provides deposit insurance to protect deposits at its member financial institutions in case of their failure. GICs offered by member banks are eligible for CDIC protection up to certain limits. On the other hand, a mutual fund company covered by the Investment Industry Regulatory Organization of Canada (IPC), an investment dealer covered by the Canadian Investor Protection Fund (CIPF), or an insurance company covered by the Ombudsman for Banking Services and Investments (OBSI) do not provide the same type of deposit insurance for GICs as the CDIC does. Therefore, for the GIC, the best option would be a chartered bank covered by the CDIC.