Stan, a portfolio manager, is looking at two steel companies as potential investments. Truesteel Inc. has a current ratio of 2:1 while Strongco Ltd. has a current ratio of 0.8:1.
What could this information indicate?
Bernadette has a high-paying job and is in the top tax bracket. She recently received a payment of $5 million upon the settlement of her uncle’s estate. Bernadette would like to invest her inheritance in financial products that would not only grow her money but is also income tax friendly.
Which of the following would provide the most favourable tax treatment?
What purpose does it serve for non-money market mutual funds to hold money market instruments?
Which of the following Dealing Representatives has fulfilled their "Know Your Product" obligation?
Nelson is a Dealing Representative with True Wealth Advisors Inc., a mutual fund dealer. Nelson follows proper procedures related to his firm’s Relationship Disclosure Information (RDI). Which of the following CORRECTLY describes how Nelson is permitted to evidence that he satisfied his RDI obligation?
Xerxes, 45 years old, is a successful architect, having an annual income of $185,000. He has around $10,000 in his non-registered account, which he is looking to invest in a tax-efficient manner.
From the following options, which would be the most tax-efficient?
Your clients, Jessica and Ken, want to buy a house next year. You recommend a money market fund. How do you think a money market fund will help Jessica and Ken reach their goal?
Which of the following statements about capital gains distributions from mutual fund trusts is correct?
Last year at age 70, Gregory opened a registered retirement income fund (RRIF). Recently, Gregory unexpectedly received a large cash gift and presently does not need to depend on any payments from his RRIF. He contacts his financial advisor Eric for guidance.
Which of the following statements by his financial advisor would be CORRECT?
Sven owns preferred shares that give him the option to sell his holdings back to the issuing company at a predetermined price and within a specified time. What type of preferred shares does Sven own?
What statement CORRECTLY describes a key difference between bonds and debentures?
The owners of Underground Airways Ltd. want to take their privately owned corporation public through an initial public offering (IPO). They are speaking to a specialist from an investment dealer to determine
whether it would be advisable to become listed on a stock exchange or the over-the-counter (OTC) market.
In comparing the two options, which of the following considerations is TRUE?
Sheldon is a 25 year old graphic designer. He has just started working and saves regularly. Apart from his regular salary he also earns extra money from freelancing after office hours and during weekends. His earnings from his freelance work are sufficient for meeting his living expenses. He saves the entire amount of his salary. He has heard about lifecycle funds but has come to you for additional information.
Which of the following statement about lifecycle funds is TRUE?
Saheed is a retiree who is considering splitting his pension income with his wife, Minu.
Which of the following outcomes may occur if he shares his pension benefits?
Greg, one of your clients, has been advised by a friend to invest in open-end mutual funds. He is not sure about the differences between open and closed-end funds.
What would you tell Greg about open-end funds?
Solomon is a Dealing Representative who is excited about a new equity fund his dealer recently approved. He thinks investors will be attracted to the fund’s historical performance. He has a prospective new client, Madira, who is 25 years old. Madira has invested in mutual funds before, but not with Solomon’s dealer. She has made an appointment to open a new RRSP with Solomon’s firm.
What does Solomon need to do to make this a suitable recommendation?
Based on your discussions with your client Sierra, you believe an asset allocation of 30% fixed income and 70% equities will help her achieve her long-term goals. What type of asset allocation strategy are you implementing?
Exchange traded funds (ETFs) that track an index and index mutual funds have many similarities. However, what is a major difference between these two products?
Davis invested in a tactical asset allocation fund in his non-registered investment account. Distributions from the mutual fund are paid directly to Davis and not reinvested. Assuming a federal marginal tax rate
of 26%, dividend gross-up rate of 38% and federal dividend tax credit rate of 15%, which type of distribution would result in the lowest amount of tax payable?
As a measurement of risk, which of the following statements about beta is TRUE?
Which of the following money market securities have the highest degree of risk for the investor?
What do Guaranteed Income Supplement (GIS) and Allowance for the Survivor have in common?
Justin and Yvonne both open a Registered Education Savings Plan (RESP) for their daughter Grace. They plan to regularly contribute $1,000 per year until Grace reaches the age of 17.
Which of the following statements relating to RESP is CORRECT?
Jonathan is a Dealing Representative who has just finished an appointment with his new client, Shirley. Jonathan has concluded that Shirley has a low-risk profile but wants to establish additional savings of $500,000. During their discussion, Shirley emphasizes she wants investments that are also tax efficient. Jonathan learned that currently Shirley has no registered retirement savings plan (RRSP) and tax-free savings account (TFSA) contribution room due to using those opportunities by investmenting elsewhere.
What variable is a PRIMARY consideration for Jonathan when making an investment recommendation?
Which of the following statements about capital gains distributions from mutual fund trusts is correct?
Your client Gerard is 30 years old and plans to retire at age 65. He has a mutual fund portfolio of $40,000 in which he invests $1,500 monthly. Gerard's objective is to use these funds to meet the 20% down payment requirement to buy a house for $650,000.
What is Gerard's investment time horizon not considering market fluctuations?
Which of the following statements about your mutual fund registration is CORRECT?
When comparing mutual funds, what information would help a Dealing Representative determine a suitable mutual fund for a client?
Gregory is a conservative investor who wants to hold a portfolio of equity securities that would fall less than the overall market in a downturn.
Which of the following portfolios would you advise Gregory to invest in?
Pierre wants to discuss the merits of a specific mutual fund with his Dealing Representative, Simone. There are no trailer fees associated with this fund. Simone is familiar with the mutual fund that Pierre is referring to, which is not offered by her dealer. They schedule an appointment to further discuss his investment portfolio.
Which behaviour from Simone is ethical?
Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?
Faruq is a Dealing Representative with Smart Planning Group, a mutual fund dealer. Faruq meets with his new client, Taline, and learns that she lives on a low, fixed income.
Taline tells Faruq that she wants to maximize her investment returns as high as possible to make up the difference. Taline also indicates that she cannot afford large investment losses because her income is low. Which of the following CORRECTLY describes how Faruq should assess Taline’s risk profile?
Sean purchases 500 units of Penn Canadian Equity Fund when the net asset value per unit (NAVPU) is $16.70. On December 15, the mutual fund’s NAVPU is $21. On December 16, the mutual fund declares a distribution of $1.25 per unit. Sean’s distribution is immediately reinvested and he purchases additional units of the mutual fund.
Which of the following statements about the effect of the distribution is correct?
Quinton, a Dealing Representative, meets with his client Banji. Banji’s Know Your Client (KYC) indicates that her risk profile is “medium’’. Banji currently has $35,000 in her account which is invested 50% in the Middleton Balanced Fund and 50% in the Hector Growth Fund. She tells Quinton that she would like to contribute an additional $10,000 to purchase the Prospect Labour-Sponsored Fund. Which of the following statements about Banji’s proposed transaction is CORRECT?
One of your clients, Harry, has heard that he can defer paying tax on capital gains. He wants to know if what he has heard is correct and if so, how to defer paying taxes on capital gains.
What would you tell Harry?
What is the national self-regulatory organization (SRO) for investment dealers?
Sonya meets with her client Elijah to review different investment approaches that could be offered to help him reach his financial goals. Part of that discussion included Sonya mentioning factors such as
inflation, interest rates, and rates of return. Which stage of the Strategic Investment Planning (SIP) process does this describe?
Beatrice is looking for comprehensive information regarding the analysis of financial statements and fund management expenses as it relates to her current mutual fund investment.
Which document would provide the information she is looking for?
Lucas wants to participate in the Lifelong Learning Program (LLP). He currently has $10,000 in his registered retirement savings plan (RRSP) for this purpose. He plans to make his maximum permitted
withdrawal of $10,000 under the LLP in two months. Based on this information, what would be his investment objective for the $10,000 currently sitting in his RRSP?
Patrick is a portfolio manager for the HyperTally Growth Fund. It has generated an annualized rate of return of 10% this past year. However, with the anticipation of very high inflation to soon occur, there is also an expectation of higher interest rates. Patrick is concerned about the future returns of existing stocks within the fund. What may Patrick do to protect against the market value of the fund dropping?
Which of the following statements is TRUE about the movement of business cycles in the Canadian economy?