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NEW QUESTION # 20
Hamid, the portfolio manager of the Trabant Canadian Equity Fund is deciding on some new investments. He has identified a retirement residence company as well as a discount clothing retailer that both seem to have good prospects and appear undervalued. What investment approach is Hamid using?
- A. top-down
- B. growth at a reasonable price
- C. technical investing
- D. bottom-up
Answer: D
NEW QUESTION # 21
Eleanora receives a $500 eligible Canadian dividend from her mutual fund. Her federal marginal tax rate for the year is 29%. Assuming the enhanced gross-up of 38% and a federal dividend tax credit of 15.02%, how much federal tax will she pay on her dividend?
- A. $69.90
- B. $189.16
- C. $115.40
- D. $96.46
Answer: D
NEW QUESTION # 22
David had $10,000 in his investment account with Dynamic Investments, a mutual funds dealer. On June 28, David wants to buy 500 units in ABC Canadian Dividend Fund that has a Net Asset Value Per Unit (NAVPU) of $14.10. His friend Robert suggests that he may get a better price if he used the strategy of dollar-cost averaging. David then instructs his Dealing Representative to place a purchase order for 100 units on the first of every month starting July 1st for the next 5 months.
The orders are executed at the following NAVPUs.
July 01, $14.00
Aug. 01, $14.50
Sep. 01, $15.00
Oct. 01, $14.25
Nov. 01, $16.50
Did David get a better purchase price following the dollar-cost averaging strategy compared to making a lump-sum purchase of 500 shares on Jun 28, 20xx?
- A. David got his 500 units at a higher price than the lump sum price he would have paid
- B. David realizes that Dollar cost averaging is the best strategy for getting lower prices.
- C. David got his 500 units at a lower price than the lump sum price he would have paid.
- D. David got his 500 units at the same price as the lump sum price he would have paid.
Answer: A
NEW QUESTION # 23
In a mutual fund dealer, who is the person responsible for establishing and maintaining compliance policies and procedures as well as monitoring and assessing compliance?
- A. the chief executive officer
- B. the ultimate designated person
- C. the trustee
- D. the chief compliance officer
Answer: D
NEW QUESTION # 24
Which statement about unused registered retirement savings plan (RRSP) contribution room is CORRECT?
- A. It can be carried forward a maximum of seven years.
- B. It can be carried forward to future years.
- C. It may not be carried forward.
- D. It may not be more than the RRSP contribution limit for the year in which it is carried forward.
Answer: B
NEW QUESTION # 25
The owners of Underground Airways Ltd. want to take their privately owned corporation public through an initial public offering (IPO). They are speaking to a specialist from an investment dealer to determinewhether it would be advisable to become listed on a stock exchange or the over-the-counter (OTC) market.
In comparing the two options, which of the following considerations is TRUE?
- A. If Underground chose to list on the OTC market, there would be no secondary market available for investors.
- B. Underground would be subject to less stringent listing requirements if they chose the stock exchange as compared to the OTC market.
- C. Underground would still be directly involved in the trading of their shares on either market.
- D. A stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market.
Answer: D
NEW QUESTION # 26
Daisy is a Dealing Representative registered in the province of Saskatchewan only. Daisy's client, Orville, a resident of Lloydminster, Saskatchewan is a retiree who presently has a $1,000,000 with her dealer, Easy Ride Financial. Orville is now planning to move to Vegreville, Alberta next month. Easy Ride Financial is registered in Alberta and Saskatchewan. Neither Easy Ride Financial nor Daisy have any clients who are resident in Alberta.
Which of the following should Daisy do if she wants to continue to service Orville's account?
- A. Daisy will need to forfeit her registration in Saskatchewan if she wants to be registered in Alberta to keep Orville as a client.
- B. Daisy could seek permission from her dealer to request a client mobility exemption with the Alberta Securities Commission.
- C. Request approval from the Mutual Fund Dealers Association of Canada to be eligible to be a registered Dealing Representative in Alberta
- D. Register with a different mutual fund dealer that is registered in Alberta so she can keep Orville as a client.
Answer: B
NEW QUESTION # 27
Greg, one of your clients, has been advised by a friend to invest in open-end mutual funds. He is not sure about the differences between open and closed-end funds.
What would you tell Greg about open-end funds?
- A. Initial shares in the mutual fund are allotted through an initial public offering (IPO)
- B. Units are bought and sold amongst the unitholders.
- C. The number of units is not fixed, and varies with investor demand and redemption orders.
- D. Investors holding open-end funds can buy and sell their mutual funds anytime the stock market is open.
Answer: C
NEW QUESTION # 28
Every February, Reginald, a Dealing Representative, feels pressured by his Manager to generate new registered retirement savings plans (RRSP) and contributions to assist the branch in meeting broader business targets. Reginald is nearing the end of February, and he has a meeting with a new client, Orel. Orel wants to open a tax-free savings account (TFSA) to develop emergency savings because he does not want to worry about his withdrawals being taxed. Reginald suggests that if Orel were to contribute to an RRSP first, then the resulting tax savings could be used to fund a new emergency account.
In relation to account suitability, what can be said about Reginald's advice?
- A. By convincing Orel to contribute an RRSP, instead of a TFSA, Reginald has put his client's interest first.
- B. Based on Orel's stated need, recommending an RRSP contribution is unsuitable.
- C. Reginald is putting the client's interest first by informing Orel why he should change his purpose for investing.
- D. Recommending an investment solution that addresses two needs is putting Reginald's client's interest first
Answer: B
NEW QUESTION # 29
Karen's know your client (KYC) profile corresponds to someone who has a long time horizon, is comfortable with risk and volatility, and is primarily interested in growth. She watches the daily movements of the Toronto Stock Exchange (TSX) and wants a mutual fund that will closely match what she sees.
What kind of mutual fund would be BEST for her?
- A. Canadian bond fund
- B. Canadian equity index fund
- C. Canadian small capitalization equity fund
- D. Canadian dividend fund
Answer: B
NEW QUESTION # 30
Sheldon is a 25 year old graphic designer. He has just started working and saves regularly. Apart from his regular salary he also earns extra money from freelancing after office hours and during weekends. His earnings from his freelance work are sufficient for meeting his living expenses. He saves the entire amount of his salary. He has heard about lifecycle funds but has come to you for additional information.
Which of the following statement about lifecycle funds is TRUE?
- A. Investor income is the only basis for changing the asset allocation of a lifecycle mutual fund.
- B. The asset allocation of a lifecycle fund is set based on the age demographic of its unitholders and remains the same for the time frame of the lifecycle fund.
- C. As Sheldon gets older, the life cycle asset allocation changes from more risky to less risky.
- D. All lifecycle funds start with equal allocations to cash, fixed income and equities before being re-balanced.
Answer: C
NEW QUESTION # 31
Danica is looking for a mutual fund to hold in her non-registered account that provides a regular stream of income with potential for capital growth. She is having difficulty distinguishing between bond funds and dividend funds. Which of the following statements is TRUE?
- A. Bond funds receive fixed interest payments from most of their investments.
- B. The return of dividend funds relies only on interest rates; whereas with bond funds, the return also depends on the general direction of stock markets.
- C. Bond fund distributions receive more favorable tax treatment than that of dividend funds.
- D. When interest rates rise, the net asset value per unit (NAVPU) of bond funds decreases; whereas with dividend funds it rises.
Answer: A
NEW QUESTION # 32
Your client, Rinaldo, wants to know more about the fees associated with his mutual funds. What can you tell him about a mutual fund's management expense ratio (MER)?
- A. Mutual fund performance is not impacted by the MER since rates of return are published net of fees.
- B. The MER reflects the percentage of each dollar of fund assets that is used to pay for management services.
- C. Trailer and brokerage fees are charged separately from the MER.
- D. Mutual funds are required to calculate the MER on a daily basis.
Answer: B
NEW QUESTION # 33
Sven owns preferred shares that give him the option to sell his holdings back to the issuing company at a predetermined price and within a specified time. What type of preferred shares does Sven own?
- A. retractable
- B. redeemable
- C. convertible
- D. participating
Answer: A
NEW QUESTION # 34
Sujay contributes 3% of his $60,000 salary to his employer's defined contribution pension plan. His employer contributes the same amount to the plan. How will this affect his registered retirement savings plan (RRSP) contribution room for the year?
- A. It will reduce Suiay's contribution room by
- B. It will reduce Suiay's contribution room by 51,800.
- C. It will reduce Suiay's contribution room by $3,600.
- D. It will have no effect. RRSP contribution room is based on earned income only.
Answer: A
NEW QUESTION # 35
Jasmine received an inheritance from her grandmother of $10,000. She wants to invest her money wisely. She has seen in the news that a particular energy company is doing very well and has good prospects. She has also seen how volatile its share price has been in the last year. She knows the risks of the resource sector and wants to invest but is not comfortable with so much volatility. Which of the following mutual fund benefits would address her concern?
- A. convenience
- B. low cost
- C. diversification
- D. liquidity
Answer: C
NEW QUESTION # 36
Your clients, Jessica and Ken, want to buy a house next year. You recommend a money market fund. How do you think a money market fund will help Jessica and Ken reach their goal?
- A. Money market funds provide high returns without risking the capital invested.
- B. Money market funds pay income weekly which can be automatically reinvested.
- C. Money market funds are safe investments because their net asset value per unit does not usually fluctuate.
- D. Money market funds provide investors a guaranteed fixed rate of return.
Answer: C
NEW QUESTION # 37
Jonathan is a Dealing Representative who has just finished an appointment with his new client, Shirley.
Jonathan has concluded that Shirley has a low-risk profile but wants to establish additional savings of
$500,000. During their discussion, Shirley emphasizes she wants investments that are also tax efficient.
Jonathan learned that currently Shirley has no registered retirement savings plan (RRSP) and tax-free savings account (TFSA) contribution room due to using those opportunities by investmenting elsewhere.
What variable is a PRIMARY consideration for Jonathan when making an investment recommendation?
- A. The tax consequences.
- B. Shirley's risk profile.
- C. Investment objective
- D. Expected time horizon.
Answer: B
NEW QUESTION # 38
Xian-Li believes she is a sophisticated investor. She has constructed her own portfolio and has had some success. She does not believe in studying a company's details such as earnings, expenses, or assets. She is more concerned with patterns in a company's stock price over time. She believes patterns form and can be used to predict future movements in the market.
How does Xian-Li evaluate the companies in her portfolio?
- A. technical analysis
- B. value analysis
- C. flowchart analysis
- D. fundamental analysis
Answer: A
NEW QUESTION # 39
Quinton, a Dealing Representative, meets with his client Banji. Banji's Know Your Client (KYC) indicates that her risk profile is "medium''. Banji currently has $35,000 in her account which is invested 50% in the Middleton Balanced Fund and 50% in the Hector Growth Fund. She tells Quinton that she would like to contribute an additional $10,000 to purchase the Prospect Labour-Sponsored Fund. Which of the following statements about Banji's proposed transaction is CORRECT?
- A. Quinton must provide Banji with full disclosure about the risks so that he can proceed with the purchase of the Prospect Labour-Sponsored Fund.
- B. Quinton should update Banji's risk profile to "high" so that he can proceed with the purchase of the Prospect Labour-Sponsored Fund.
- C. Quinton can proceed with the purchase of the Prospect Labour-Sponsored Fund because it is suitable for Banji based on her current KYC.
- D. Quinton should not proceed with the purchase of the Prospect Labour-Sponsored Fund because it is not suitable for Banji based on her current KYC.
Answer: D
NEW QUESTION # 40
Your client, Helen, just received her non-registered account statement which states that one of her mutual funds made an interest income distribution during the year. She asks you how she will be taxed on the distribution. What do you tell Helen?
- A. She will pay taxes at her top marginal tax rate.
- B. She will pay taxes at her average tax rate.
- C. She will pay taxes on 50% of the distribution.
- D. She will pay taxes on the grossed-up amount of the income.
Answer: A
NEW QUESTION # 41
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