IFIC - CHAPTER 1 QUESTIONS & ANSWERS
What is a mutual fund? - Answers -It's an investment vehicle that pools contributions
from investors and invests these proceeds into a variety of securities, including stocks,
bonds, and money market instruments.
What are the characteristics of Mutual Funds? - Answers -- Professionally managed
- Diversified portfolio of securities
- Low cost
What is the value in licensing? - Answers -- Professional development
- Level of competence
- Ethical manner
- Regulators' responsibility
Types of Responsibility - Answers -- Legal
- Ethical
- Professional
Legal responsibility - Answers -Make legal responsibilities clear, an investment is
suitable if it fits the client's goals, financial condition, personal circumstances,
investment knowledge and risk tolerance. All provincial securities act make this legal
responsibility clear.
Ethical Responsibility - Answers -You must place your client's needs before your own
needs, such as reaching a sales target or those of your dealer.
Professional Responsibility - Answers -You must provide the best client service
possible.
Compliance - Answers -Means following the rules, whether those rules are legal
requirements or dealer policies. If you are not in compliance you may be liable to
subject to dismissal.
Fund Facts Document - Answers -Designed to be no more than 4 pages in length and
gives investors key information about the fund itself, performance history, investments,
and the costs of investing in the fund.
Prospectus - Answers -Provides greater detail than the fund facts documents and is
much greater in length.
Know Your Client (KYC) Rule - Answers -The KYC rule states that you must use "due
diligence" to learn the essential facts relevant to every client and every order.
What is a mutual fund? - Answers -It's an investment vehicle that pools contributions
from investors and invests these proceeds into a variety of securities, including stocks,
bonds, and money market instruments.
What are the characteristics of Mutual Funds? - Answers -- Professionally managed
- Diversified portfolio of securities
- Low cost
What is the value in licensing? - Answers -- Professional development
- Level of competence
- Ethical manner
- Regulators' responsibility
Types of Responsibility - Answers -- Legal
- Ethical
- Professional
Legal responsibility - Answers -Make legal responsibilities clear, an investment is
suitable if it fits the client's goals, financial condition, personal circumstances,
investment knowledge and risk tolerance. All provincial securities act make this legal
responsibility clear.
Ethical Responsibility - Answers -You must place your client's needs before your own
needs, such as reaching a sales target or those of your dealer.
Professional Responsibility - Answers -You must provide the best client service
possible.
Compliance - Answers -Means following the rules, whether those rules are legal
requirements or dealer policies. If you are not in compliance you may be liable to
subject to dismissal.
Fund Facts Document - Answers -Designed to be no more than 4 pages in length and
gives investors key information about the fund itself, performance history, investments,
and the costs of investing in the fund.
Prospectus - Answers -Provides greater detail than the fund facts documents and is
much greater in length.
Know Your Client (KYC) Rule - Answers -The KYC rule states that you must use "due
diligence" to learn the essential facts relevant to every client and every order.
