SEGREGATED FUNDS & ANNUITIES - CHAPTER 2 - SEGREGATED FUNDS EXAM QUESTIONS
WITH CORRECT ANSWERS |LATEST UPDATE 100% SOLVED| GRADED A+
Which one of the following funds would have the HIGHEST risk? Fixed Income Fund, Real Estate
Fund, Dividend Fund, or Equity Fund? Real Estate Fund (in order to be classified as a real
estate fund, at least 90% of the fund's assets must be invested in residential, retail, commercial
and industrial properties. This type of fund earns rental income on properties, has the potential
to earn capital gains income on properties, and has the potential to earn interest income if the
fund also invests in mortgages. In an extremely illiquid market, a real estate fund reserves the
right to suspend redemption privileges. The rationale behind doing so is that selling properties
at a loss hurts all unit holders).
A segregated fund is protected from creditors during an investor's lifetime if: An irrevocable
beneficiary is named, or a revocable beneficiary is named and that beneficiary is part of the
protected class.
Who falls under the protected class with a seg fund? Parent, spouse, child or grandchild.
Felicity invests $10,000 into an RRSP. The funds were later used to purchase units in a
segregated fund. Over the years, the fund earned $3,245 in dividend allocations as well as
$1,250 in interest allocations. Felicity is now withdrawing the full amount from the RRSP, which
is $15,302. Assuming that Felicity is in a 30% tax bracket, how much tax would she owe?
$4,590.60 (the entire amount withdrawn from an RRSP would be subject to tax, regardless
of whether it is the original principal or the investment income earned within the plan.
If Elaine invests $10,000 into a seg fund, $400 of which is the front-end load, and then decided
two days later (two days after scrutinizing the information folder) to cancel her investment,
how much would Elaine get back? Elaine would receive $9,800 back due to exercising her
right of recission within two business days of receiving the information folder. (Elaine will
receive the lesser of the amount invested ($9,600, which the amount that actually made its way
into the fund) and the current value of the units ($9,400). The lesser of the two is $9,400, so she
will get this back. However, she will also receive the front-end load commission back of $400).
WITH CORRECT ANSWERS |LATEST UPDATE 100% SOLVED| GRADED A+
Which one of the following funds would have the HIGHEST risk? Fixed Income Fund, Real Estate
Fund, Dividend Fund, or Equity Fund? Real Estate Fund (in order to be classified as a real
estate fund, at least 90% of the fund's assets must be invested in residential, retail, commercial
and industrial properties. This type of fund earns rental income on properties, has the potential
to earn capital gains income on properties, and has the potential to earn interest income if the
fund also invests in mortgages. In an extremely illiquid market, a real estate fund reserves the
right to suspend redemption privileges. The rationale behind doing so is that selling properties
at a loss hurts all unit holders).
A segregated fund is protected from creditors during an investor's lifetime if: An irrevocable
beneficiary is named, or a revocable beneficiary is named and that beneficiary is part of the
protected class.
Who falls under the protected class with a seg fund? Parent, spouse, child or grandchild.
Felicity invests $10,000 into an RRSP. The funds were later used to purchase units in a
segregated fund. Over the years, the fund earned $3,245 in dividend allocations as well as
$1,250 in interest allocations. Felicity is now withdrawing the full amount from the RRSP, which
is $15,302. Assuming that Felicity is in a 30% tax bracket, how much tax would she owe?
$4,590.60 (the entire amount withdrawn from an RRSP would be subject to tax, regardless
of whether it is the original principal or the investment income earned within the plan.
If Elaine invests $10,000 into a seg fund, $400 of which is the front-end load, and then decided
two days later (two days after scrutinizing the information folder) to cancel her investment,
how much would Elaine get back? Elaine would receive $9,800 back due to exercising her
right of recission within two business days of receiving the information folder. (Elaine will
receive the lesser of the amount invested ($9,600, which the amount that actually made its way
into the fund) and the current value of the units ($9,400). The lesser of the two is $9,400, so she
will get this back. However, she will also receive the front-end load commission back of $400).
