Segregated Funds & Annuities -
Chapter 1 questions and answers
A GIC
(Reference: Chapter 1) - answer A client wants to ensure the full original
investment will be repaid, plus a profit. What would be an appropriate
recommendation for this client?
Interest.
(Reference: Chapter 1) - answer Mary owns stock in a US-based company
which trades on the Nasdaq exchange. Mary receives a dividend from her
stock. How is the dividend taxed?
Market risk.
(Reference: Chapter 1) - answer What type of risk refers to the possibility
that the total financial market could decline due to an uncontrollable event
such as a natural disaster?
Liquidity risk.
(Reference: Chapter 1) - answer Steve is a real estate investor, while Sarah
invests in mutual funds. What risk would likely pose a threat to Steve, but
not Sarah?
The price paid for a bond on the open market, expressed as a factor of
dollars per $100 of the face amount.
(Reference: Chapter 1) - answer What does bond price refer to?
, A credit that reduces income tax owed by individual taxpayers on dividends
received from qualifying Canadian corporations.
(Reference: Chapter 1) - answer What is the dividend tax credit?
FV is the value of today's sum of money at a future date, based on a
specified rate of return.
(Reference: Chapter 1) - answer What does the future value (FV) of money
refer to?
The impact of the increase in the Consumer Price Index, over time, on the
buying power of the dollar.
(Reference: Chapter 1) - answer What is inflation?
A risk in which inflation erodes the value of returns and purchasing power is
diminished over time.
(Reference: Chapter 1) - answer What is inflation risk?
The risk of fluctuating interest rates with interest-paying investments,
including reinvestment risk.
(Reference: Chapter 1) - answer What is interest rate risk?
Reasons and factors unique to each individual impacting investment
decisions.
Chapter 1 questions and answers
A GIC
(Reference: Chapter 1) - answer A client wants to ensure the full original
investment will be repaid, plus a profit. What would be an appropriate
recommendation for this client?
Interest.
(Reference: Chapter 1) - answer Mary owns stock in a US-based company
which trades on the Nasdaq exchange. Mary receives a dividend from her
stock. How is the dividend taxed?
Market risk.
(Reference: Chapter 1) - answer What type of risk refers to the possibility
that the total financial market could decline due to an uncontrollable event
such as a natural disaster?
Liquidity risk.
(Reference: Chapter 1) - answer Steve is a real estate investor, while Sarah
invests in mutual funds. What risk would likely pose a threat to Steve, but
not Sarah?
The price paid for a bond on the open market, expressed as a factor of
dollars per $100 of the face amount.
(Reference: Chapter 1) - answer What does bond price refer to?
, A credit that reduces income tax owed by individual taxpayers on dividends
received from qualifying Canadian corporations.
(Reference: Chapter 1) - answer What is the dividend tax credit?
FV is the value of today's sum of money at a future date, based on a
specified rate of return.
(Reference: Chapter 1) - answer What does the future value (FV) of money
refer to?
The impact of the increase in the Consumer Price Index, over time, on the
buying power of the dollar.
(Reference: Chapter 1) - answer What is inflation?
A risk in which inflation erodes the value of returns and purchasing power is
diminished over time.
(Reference: Chapter 1) - answer What is inflation risk?
The risk of fluctuating interest rates with interest-paying investments,
including reinvestment risk.
(Reference: Chapter 1) - answer What is interest rate risk?
Reasons and factors unique to each individual impacting investment
decisions.
