IFIC Study Guide – Chapter 10: Understanding Clients
and Making Recommendations
-an investment vehicle operated by an investment company that pools contributions from
investors and invests these proceeds into a variety of securities, including stocks, bonds and
money market instruments
-individuals who contribute money become share or unitholders in the fund and share in the
income, gains, losses and expenses the fund incurs in proportion to the number of units or
shares that they own.
-professional money managers manage the assets of the fund by investing the proceeds
according to the fund's policies and objectives and based on a particular investing style - correct
answer ✔✔Mutual Fund
-Mutual fund shares/units are redeemable on demand at the fund's current price or (NAVPS) or
(NAVPU), which depends on the market value of the fund's portfolio of securities at that time -
correct answer ✔✔Net Asset Value Per Share (NAVPS) or Net Asset Value Per Unit (NAVPU)
-states a funds prime investment goals
-covers the degree of safety or risk that is acceptable
-whether income or capital gain is the prime objective
-the main types of securities in the fund's investment portfolio - correct answer ✔✔Prospectus
-low-cost professional management
-diversification
-variety of types of funds and transferability
-variety of purchase and redemption plans
-liquidity
-ease of estate planning
, -loan collateral and margin eligibility
-various special options - correct answer ✔✔Advantages of Mutual Funds
-the fund manager, an investment specialist, manages the fund's investment portfolio on a
continuing basis. This is an inexpensive way for the small investor to access professional
management of their investments when they do not have the time, knowledge or expertise to
monitor their portfolio of securities
-the fund manager fine-tunes the fund's asset mix as market conditions change. - correct
answer ✔✔Mutual Fund Advantage: Low-Cost Professional Management
-a typical large fund might have a portfolio consisting of 60 to 100 or more different securities in
15 to 20 industries. For the individual investor, acquiring such a portfolio of stocks is likely not
feasible. Because individual accounts are pooled, sponsors of managed products enjoy
economies of scale that can be shared with mutual fund share or unit holders.
-managed funds can trade more economically than the individual investor. Thus, fund
ownership provides a low-cost way for small investors to acquire a diversified portfolio. - correct
answer ✔✔Mutual Fund Advantage: Diversification
-the availability of a wide range of mutual funds enables investors to meet a wide range of
objectives (i.e., from fixed-income funds through to aggressive equity funds).
-many fund families also permit investors to transfer between two or more different funds being
managed by the same sponsor, usually at little or no added fee. - correct answer ✔✔Mutual
Fund Advantage: Variety Of Types Of Funds And Transferability
-there are many purchase plans, ranging from one-time, lump-sum purchases to regular
purchases in small amounts under pre-authorized contribution plans. One of the main
advantages of mutual funds is the low cost to invest. At redemption, there are also several plans
from which to choose. - correct answer ✔✔Mutual Fund Advantage: Variety Of Purchase And
Redemption Plans
-mutual fund shareholders have a continuing right to redeem shares for cash at net asset value.
National Instrument 81-102 requires that payments be made within two business days after the
and Making Recommendations
-an investment vehicle operated by an investment company that pools contributions from
investors and invests these proceeds into a variety of securities, including stocks, bonds and
money market instruments
-individuals who contribute money become share or unitholders in the fund and share in the
income, gains, losses and expenses the fund incurs in proportion to the number of units or
shares that they own.
-professional money managers manage the assets of the fund by investing the proceeds
according to the fund's policies and objectives and based on a particular investing style - correct
answer ✔✔Mutual Fund
-Mutual fund shares/units are redeemable on demand at the fund's current price or (NAVPS) or
(NAVPU), which depends on the market value of the fund's portfolio of securities at that time -
correct answer ✔✔Net Asset Value Per Share (NAVPS) or Net Asset Value Per Unit (NAVPU)
-states a funds prime investment goals
-covers the degree of safety or risk that is acceptable
-whether income or capital gain is the prime objective
-the main types of securities in the fund's investment portfolio - correct answer ✔✔Prospectus
-low-cost professional management
-diversification
-variety of types of funds and transferability
-variety of purchase and redemption plans
-liquidity
-ease of estate planning
, -loan collateral and margin eligibility
-various special options - correct answer ✔✔Advantages of Mutual Funds
-the fund manager, an investment specialist, manages the fund's investment portfolio on a
continuing basis. This is an inexpensive way for the small investor to access professional
management of their investments when they do not have the time, knowledge or expertise to
monitor their portfolio of securities
-the fund manager fine-tunes the fund's asset mix as market conditions change. - correct
answer ✔✔Mutual Fund Advantage: Low-Cost Professional Management
-a typical large fund might have a portfolio consisting of 60 to 100 or more different securities in
15 to 20 industries. For the individual investor, acquiring such a portfolio of stocks is likely not
feasible. Because individual accounts are pooled, sponsors of managed products enjoy
economies of scale that can be shared with mutual fund share or unit holders.
-managed funds can trade more economically than the individual investor. Thus, fund
ownership provides a low-cost way for small investors to acquire a diversified portfolio. - correct
answer ✔✔Mutual Fund Advantage: Diversification
-the availability of a wide range of mutual funds enables investors to meet a wide range of
objectives (i.e., from fixed-income funds through to aggressive equity funds).
-many fund families also permit investors to transfer between two or more different funds being
managed by the same sponsor, usually at little or no added fee. - correct answer ✔✔Mutual
Fund Advantage: Variety Of Types Of Funds And Transferability
-there are many purchase plans, ranging from one-time, lump-sum purchases to regular
purchases in small amounts under pre-authorized contribution plans. One of the main
advantages of mutual funds is the low cost to invest. At redemption, there are also several plans
from which to choose. - correct answer ✔✔Mutual Fund Advantage: Variety Of Purchase And
Redemption Plans
-mutual fund shareholders have a continuing right to redeem shares for cash at net asset value.
National Instrument 81-102 requires that payments be made within two business days after the
