INVESTMENT FUNDS IN CANADA EXAM PREP
COMPLETE QUESTIONS AND VERIFIED
ANSWERS GRADED A+
◉Indicate the required timeframe for prior notification to a client of a
new or increased charge to their account.
a) 30 days.
b) 90 days.
c) 60 days.
d) 120 days. Answer: c) 60 days.
FEEDBACK : Rule 2.4.3 - 60 days prior written notice must be given to
clients for any new or increased operating charges in their accounts;
◉A mutual fund sales representative is interviewing a 35-year old,
single client, with extremely low risk tolerance. The client's stated
investment objective is to save for his retirement in 25 years. He has few
retirement assets. The representative determines that an asset allocation
of 60% equities, 30% fixed income and 10% near-cash would be
appropriate given his age and objectives, but the client refuses and
wishes only to invest in near-cash investments. What course of action
would be most appropriate for the representative to takes?
,a) Advise the client to invest primarily in near-cash to match his risk
tolerance.
b) Refuse to continue the relationship unless the client accepts the
60/30/10 recommendation.
c) Explain the risks involved with both a 60% equity allocation, and a
zero equity allocation.
d) Reassure the client that a 60% equity allocation in a well-diversified
portfolio carries little risk. Answer: c) Explain the risks involved with
both a 60% equity allocation, and a zero equity allocation.
FEEDBACK : You must make a concerted effort to know the client—-to
understand the financial and personal status and aspirations of the client.
You will make recommendations for the client to invest funds in mutual
funds that reflect, to the best of your knowledge, these considerations.
Having provided sound advice, you will be above reproach for
potentially unsuitable purchases and sales of securities for a client if the
client does not heed your advice.
◉What are non-registered persons permitted to do with regards to
mutual funds?
a) Provide recommendation on mutual funds.
b) Assist the client with the completion of order forms.
c) Hand out a mutual fund prospectus.
d) Accept a completed order form for the purpose of forwarding it to a
registered salesperson for processing. Answer: d) Accept a completed
, order form for the purpose of forwarding it to a registered salesperson
for processing.
FEEDBACK : A non-registered salesperson cannot perform any act in
furtherance of a trade. There are several tasks that non-registered people
may do with regards to mutual fund transactions. They can accept
redemption requests for the purpose of processing the redemption by a
registered sales representative, they can accept a completed order form
for the purpose of forwarding it to a registered salesperson for
processing, they can provide basic information to current unit holders
regarding their current holdings, such as NAVPU, number of units held,
distributions given, but only if it does not solicit additional sales. They
can also refer clients to a registered sales representative.
◉Outside Quebec, indicate the required timeframe for a dealer to notify
the relevant securities administrator of the termination of a salesperson's
employment.
a) 1 business day.
b) 10 business days.
c) 30 days.
d) 5 business days. Answer: d) 5 business days.
FEEDBACK :
The registered dealing representative and the registrant's dealer must
notify the appropriate securities administrator promptly in writing within
COMPLETE QUESTIONS AND VERIFIED
ANSWERS GRADED A+
◉Indicate the required timeframe for prior notification to a client of a
new or increased charge to their account.
a) 30 days.
b) 90 days.
c) 60 days.
d) 120 days. Answer: c) 60 days.
FEEDBACK : Rule 2.4.3 - 60 days prior written notice must be given to
clients for any new or increased operating charges in their accounts;
◉A mutual fund sales representative is interviewing a 35-year old,
single client, with extremely low risk tolerance. The client's stated
investment objective is to save for his retirement in 25 years. He has few
retirement assets. The representative determines that an asset allocation
of 60% equities, 30% fixed income and 10% near-cash would be
appropriate given his age and objectives, but the client refuses and
wishes only to invest in near-cash investments. What course of action
would be most appropriate for the representative to takes?
,a) Advise the client to invest primarily in near-cash to match his risk
tolerance.
b) Refuse to continue the relationship unless the client accepts the
60/30/10 recommendation.
c) Explain the risks involved with both a 60% equity allocation, and a
zero equity allocation.
d) Reassure the client that a 60% equity allocation in a well-diversified
portfolio carries little risk. Answer: c) Explain the risks involved with
both a 60% equity allocation, and a zero equity allocation.
FEEDBACK : You must make a concerted effort to know the client—-to
understand the financial and personal status and aspirations of the client.
You will make recommendations for the client to invest funds in mutual
funds that reflect, to the best of your knowledge, these considerations.
Having provided sound advice, you will be above reproach for
potentially unsuitable purchases and sales of securities for a client if the
client does not heed your advice.
◉What are non-registered persons permitted to do with regards to
mutual funds?
a) Provide recommendation on mutual funds.
b) Assist the client with the completion of order forms.
c) Hand out a mutual fund prospectus.
d) Accept a completed order form for the purpose of forwarding it to a
registered salesperson for processing. Answer: d) Accept a completed
, order form for the purpose of forwarding it to a registered salesperson
for processing.
FEEDBACK : A non-registered salesperson cannot perform any act in
furtherance of a trade. There are several tasks that non-registered people
may do with regards to mutual fund transactions. They can accept
redemption requests for the purpose of processing the redemption by a
registered sales representative, they can accept a completed order form
for the purpose of forwarding it to a registered salesperson for
processing, they can provide basic information to current unit holders
regarding their current holdings, such as NAVPU, number of units held,
distributions given, but only if it does not solicit additional sales. They
can also refer clients to a registered sales representative.
◉Outside Quebec, indicate the required timeframe for a dealer to notify
the relevant securities administrator of the termination of a salesperson's
employment.
a) 1 business day.
b) 10 business days.
c) 30 days.
d) 5 business days. Answer: d) 5 business days.
FEEDBACK :
The registered dealing representative and the registrant's dealer must
notify the appropriate securities administrator promptly in writing within
