Seg Mock Exam 2 Questions and Answers (Graded A+)

Gary is reviewing his portfolio and notices that the value of a segregated fund he recently purchased has dropped significantly. He is worried about the fund. The last time he spoke with his advisor was the day he purchased the fund. He and his advisor have both been busy and not had time to speak. What did Gary's advisor do incorrectly? a) Gary's advisor should have followed up to see if he was satisfied with the segregated fund. b) Gary and his advisor are required to meet at least once every two years to review his portfolio. c) Gary's advisor should have updated him on the risks in his portfolio so Gary did not lose any money. d) Gary and his advisor should have made a fund switch before his investment dropped in value. - ANSWER-(wrong) Gary and his advisor should have made a fund switch before his investment dropped in value. Rationale: The agent should follow up with the client once the sales process is completed to ensure his satisfaction with the product and to answer any questions. (Refer to section 6.3.3.1) Danny is with his agent filling in an application for a non-registered segregated fund investment. He is 40 years old and wants to use the funds when he turns 60. Danny wants to choose the reset option on the fund. The insurer only offers scheduled resets and the account is reset every six months. The agent tells Danny that: a) He can have the reset option for the first 10 years, after which he can terminate the scheduled resets. b) He should not go for scheduled resets because the contract will be reset irrespective of the value in the contract. c) He should choose the scheduled reset because it locks in the growth. He can surrender his contract at any time. d) He should not choose the reset option because he needs to use the funds when he turns 60. - ANSWER-He should choose the scheduled reset because it locks in the growth. He can surrender his contract at any time. Rationale: A reset can be scheduled or unscheduled. Not all funds allow resets. When a reset occurs, the contract maturity date is advanced to 10 years from the reset date. (Refer to Section 6.3.3) Cory is a manager of a food transformation plant where the average salary is $40,000. In an effort to keep his best employees, he is looking to implement a group plan for retirement savings. The company is willing to contribute on behalf of the employees in this plan, as long as the employees contribute as well. It is important to Cory that the company contributions are stable and do not incur additional charges. He also wants to make sure that the money invested goes towards retirement and not other purchases. What type of group plan is best suited for Cory's company? a) Define Contribution Pension Plan (DCPP) b) Group Registered Retirement Savings Plan (GRRSP) c) Group Tax-Free Savings Account (TFSA) d) Deferred Profit Sharing Plan (DPSP) - ANSWER-(correct) Define Contribution Pe