2/14/25, 12:11 AM Check Companion
Check: Volume 2 Practice Test 1
Reports
Overall Results
Score: Number
Attempt Questions Correct Your Score
62%
1 100 62 62%
You have passed the test.
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,2/14/25, 12:11 AM Check Companion
Learning Domain Results
Score: Number
Learning Domain Questions Correct Your Score
62%
Investment Analysis 18 11 61%
Portfolio Analysis 18 13 72%
Mutual Funds 14 8 57%
Exchange-Traded Funds 11 5 45%
Alternative Investments,
Other Managed and
Structured Products 14 12 86%
Canadian Taxation 8 4 50%
Fee-Based Accounts and
Working with the Retail
Client 6 4 67%
Working with the
Institutional Client 11 5 45%
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,2/14/25, 12:11 AM Check Companion
Question Results
1. A hedge fund has a hurdle rate of 3% and no high-water mark. Under which circumstances will the hedge fund’s manager receive an
incentive fee?
A. Non-market-related return on the fund greater than 3%.
B. Return on the fund greater than its benchmark return plus 3%.
Good choice! C. Return on the fund greater than 3%.
D. Return on the fund greater than 3% over the risk-free rate.
Feedback: A hurdle rate is the rate a hedge fund must earn before its manager is paid an incentive fee. For example, if a fund has a hurdle
rate of 5%, and the fund earns 20% for the year, incentive fees will be based only on the 15% return above the hurdle rate, subject to any
high-water mark. Hurdle rates are usually based on short-term interest rates.
Reference | Chapter 20: Alternative Investments: Benefits, Risks, and Structure
Learning Domain | Alternative Investments, Other Managed and Structured Products
2. What is the real rate of return of a portfolio with an annual return of 10% during a period when the inflation rate is 3.5% and the risk-free rate
is 4.5%?
A. 13.5%.
B. 9.0%.
Good choice! C. 6.5%.
D. 5.5%.
Feedback: The real rate of return adjusts the nominal rate on a portfolio to reflect inflation. In this example, the real rate of return is
calculated as 10% - 3.5% = 6.5%.
Reference | Chapter 15: Introduction to the Portfolio Approach
Learning Domain | Portfolio Analysis
3. Max requests that his client provide him with copies of her most recent bank statements, investment account statements, and tax returns.
Which step in the financial planning process are Max and his client completing?
A. Analyzing data and information.
B. Establishing the client-advisor relationship.
C. Conducting a periodic review and follow-up.
Good choice! D. Collecting data and information.
Feedback: When collecting data and information, the advisor must collect all information that will allow for a complete understanding of the
client’s personal financial status. This must include statements and information about the client’s asset position, as well as evidence of the
client’s tax situation.
Reference | Chapter 26: Working with the Retail Client
Learning Domain | Fee-Based Accounts and Working with the Retail Client
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, 2/14/25, 12:11 AM Check Companion
4. What is the working capital of a company with $2,500,000 in current liabilities, $6,500,000 in current assets and $10,000,000 in long-term
bonds outstanding at 6%?
A. $7,500,000.
Good choice! B. $4,000,000.
C. $3,500,000.
D. $9,000,000.
Feedback: Working capital is calculated as the excess of current assets over current liabilities and helps measure the amount of cash a
company would have to continue operating after covering all current liabilities by current assets. In this example, the company has
$4,000,000 ($6,500,000 - $2,500,000) in working capital. The bonds would be a long-term liability and not relevant to a consideration of
working capital.
Reference | Chapter 14: Company Analysis
Learning Domain | Investment Analysis
5. Drew, a financial advisor with Elite Financial, has been dealing with Varusha, a risk-averse client, for several years. Recently, Varusha has
been getting tips from her brother-in-law on some high-risk tech stocks he thinks she should buy, and she decides to invest. Drew executes
her trade requests without providing any advice to Varusha. Which of the five primary values has Drew violated?
A. Confidentiality.
B. Professionalism.
C. Integrity.
Good choice! D. Duty of care.
Feedback: Drew has violated the primary value of duty of care, which addresses unsolicited orders. An unsolicited order is an order entered
by a client that was not recommended by the investment advisor or anyone at the advisor’s firm. In giving advice to clients, advisors must
provide appropriate cautionary advice with respect to unsolicited orders that appear unsuitable based on the client’s profile. They must be
aware of the objectives and strategies behind each order accepted on behalf of their clients, whether it is solicited or not.
Reference | Chapter 26: Working with the Retail Client
Learning Domain | Fee-Based Accounts and Working with the Retail Client
6. Which structured product is most suitable for a client with a low risk tolerance who requires income?
A. Asset-backed commercial paper.
B. Principal-protected notes.
C. Split shares.
Good choice! D. National Housing Act mortgage-backed securities.
Feedback: Investors buy National Housing Act MBS because it effectively places their money in real estate (in the form of mortgages)
without the risk of default (with the benefit of Canada Mortgage and Housing Corporation’s guarantee) or the problems of collections and
credit appraisal.
Reference | Chapter 23: Structured Products
Learning Domain | Alternative Investments, Other Managed and Structured Products
7. When must an RRSP be deregistered?
A. Calendar year in which the RRSP plan holder reaches age 80.
The correct answer is: B. Calendar year in which the RRSP plan holder reaches age 71.
C. Calendar year in which the RRSP plan holder reaches age 65.
You chose: D. Calendar year in which the RRSP plan holder retires.
Feedback: An RRSP holder may make withdrawals or deregister the plan at any time, but the mandatory deregistration of an RRSP is
required during the calendar year when a plan holder reaches age 71.
Reference | Chapter 24: Canadian Taxation
Learning Domain | Canadian Taxation
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Check: Volume 2 Practice Test 1
Reports
Overall Results
Score: Number
Attempt Questions Correct Your Score
62%
1 100 62 62%
You have passed the test.
https://training.csi.ca/webapps/scor-scormengine-BB644a9e7813968/defaultui/player/modern.html?configuration=ContentId%7C_102268_1%21Cour… 1/32
,2/14/25, 12:11 AM Check Companion
Learning Domain Results
Score: Number
Learning Domain Questions Correct Your Score
62%
Investment Analysis 18 11 61%
Portfolio Analysis 18 13 72%
Mutual Funds 14 8 57%
Exchange-Traded Funds 11 5 45%
Alternative Investments,
Other Managed and
Structured Products 14 12 86%
Canadian Taxation 8 4 50%
Fee-Based Accounts and
Working with the Retail
Client 6 4 67%
Working with the
Institutional Client 11 5 45%
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,2/14/25, 12:11 AM Check Companion
Question Results
1. A hedge fund has a hurdle rate of 3% and no high-water mark. Under which circumstances will the hedge fund’s manager receive an
incentive fee?
A. Non-market-related return on the fund greater than 3%.
B. Return on the fund greater than its benchmark return plus 3%.
Good choice! C. Return on the fund greater than 3%.
D. Return on the fund greater than 3% over the risk-free rate.
Feedback: A hurdle rate is the rate a hedge fund must earn before its manager is paid an incentive fee. For example, if a fund has a hurdle
rate of 5%, and the fund earns 20% for the year, incentive fees will be based only on the 15% return above the hurdle rate, subject to any
high-water mark. Hurdle rates are usually based on short-term interest rates.
Reference | Chapter 20: Alternative Investments: Benefits, Risks, and Structure
Learning Domain | Alternative Investments, Other Managed and Structured Products
2. What is the real rate of return of a portfolio with an annual return of 10% during a period when the inflation rate is 3.5% and the risk-free rate
is 4.5%?
A. 13.5%.
B. 9.0%.
Good choice! C. 6.5%.
D. 5.5%.
Feedback: The real rate of return adjusts the nominal rate on a portfolio to reflect inflation. In this example, the real rate of return is
calculated as 10% - 3.5% = 6.5%.
Reference | Chapter 15: Introduction to the Portfolio Approach
Learning Domain | Portfolio Analysis
3. Max requests that his client provide him with copies of her most recent bank statements, investment account statements, and tax returns.
Which step in the financial planning process are Max and his client completing?
A. Analyzing data and information.
B. Establishing the client-advisor relationship.
C. Conducting a periodic review and follow-up.
Good choice! D. Collecting data and information.
Feedback: When collecting data and information, the advisor must collect all information that will allow for a complete understanding of the
client’s personal financial status. This must include statements and information about the client’s asset position, as well as evidence of the
client’s tax situation.
Reference | Chapter 26: Working with the Retail Client
Learning Domain | Fee-Based Accounts and Working with the Retail Client
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, 2/14/25, 12:11 AM Check Companion
4. What is the working capital of a company with $2,500,000 in current liabilities, $6,500,000 in current assets and $10,000,000 in long-term
bonds outstanding at 6%?
A. $7,500,000.
Good choice! B. $4,000,000.
C. $3,500,000.
D. $9,000,000.
Feedback: Working capital is calculated as the excess of current assets over current liabilities and helps measure the amount of cash a
company would have to continue operating after covering all current liabilities by current assets. In this example, the company has
$4,000,000 ($6,500,000 - $2,500,000) in working capital. The bonds would be a long-term liability and not relevant to a consideration of
working capital.
Reference | Chapter 14: Company Analysis
Learning Domain | Investment Analysis
5. Drew, a financial advisor with Elite Financial, has been dealing with Varusha, a risk-averse client, for several years. Recently, Varusha has
been getting tips from her brother-in-law on some high-risk tech stocks he thinks she should buy, and she decides to invest. Drew executes
her trade requests without providing any advice to Varusha. Which of the five primary values has Drew violated?
A. Confidentiality.
B. Professionalism.
C. Integrity.
Good choice! D. Duty of care.
Feedback: Drew has violated the primary value of duty of care, which addresses unsolicited orders. An unsolicited order is an order entered
by a client that was not recommended by the investment advisor or anyone at the advisor’s firm. In giving advice to clients, advisors must
provide appropriate cautionary advice with respect to unsolicited orders that appear unsuitable based on the client’s profile. They must be
aware of the objectives and strategies behind each order accepted on behalf of their clients, whether it is solicited or not.
Reference | Chapter 26: Working with the Retail Client
Learning Domain | Fee-Based Accounts and Working with the Retail Client
6. Which structured product is most suitable for a client with a low risk tolerance who requires income?
A. Asset-backed commercial paper.
B. Principal-protected notes.
C. Split shares.
Good choice! D. National Housing Act mortgage-backed securities.
Feedback: Investors buy National Housing Act MBS because it effectively places their money in real estate (in the form of mortgages)
without the risk of default (with the benefit of Canada Mortgage and Housing Corporation’s guarantee) or the problems of collections and
credit appraisal.
Reference | Chapter 23: Structured Products
Learning Domain | Alternative Investments, Other Managed and Structured Products
7. When must an RRSP be deregistered?
A. Calendar year in which the RRSP plan holder reaches age 80.
The correct answer is: B. Calendar year in which the RRSP plan holder reaches age 71.
C. Calendar year in which the RRSP plan holder reaches age 65.
You chose: D. Calendar year in which the RRSP plan holder retires.
Feedback: An RRSP holder may make withdrawals or deregister the plan at any time, but the mandatory deregistration of an RRSP is
required during the calendar year when a plan holder reaches age 71.
Reference | Chapter 24: Canadian Taxation
Learning Domain | Canadian Taxation
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