Question 1

If an investor was looking for an investment with a risk equal to that of the market, which factor would shewant in an investment?

Options :

A : a beta of 0

B : a standard deviation of 1

C : a standard deviation of 0

D : a beta of 1

Answer: D

Question 2

Which of the following form part of the disclosure documents relating to mutual funds?

Options :

A : balance sheet, income and cash flow statements of the portfolio management company

B : statement of net assets, annual information form, management reports of fund performance

C : annual proxy voting record, audited financial statements, and proof of registration

D : new account information form, quarterly financial statements, and security certification

Answer: B

Question 3

Recently interest rates have gone up. Your customer, Mr. Corelli, has asked you how this will affect the valueof his mortgage fund. What is the best response to give to Mr. Corelli?

Options :

A : The mortgage fund will not be affected because the rise in interest rates will affect only new mortgages

B : The value of the mortgage fund will go down because new mortgages will pay higher interest thanthose in the fund

C : The mortgage fund will not be affected because mortgages do not react to changes in interest rates theway bonds do

D : The value of the mortgage fund should go up because mortgages will now be earning higher interest

Answer: B

Question 4

Which of the followings describes segregated funds?

Options :

A : Segregated funds have high returns, high management fees, and cannot be redeemed until the maturitydate of the contract.

B : Segregated funds flow through capital losses to investors because the investors are the owners of theunderlying fund.

C : Segregated funds offer some protection of the capital invested but there is an added cost for theprotection.

D : Segregated funds are subject to securities regulation because they are distributed by mutual funddealing representatives.

Answer: C

Question 5

Your client has very limited investment knowledge and is confused about what is meant by "marginal taxrate". What do you tell him?

Options :

A : It is the tax rate applied to the next dollar earned.

B : It is the tax rate used in calculating taxable capital gains.

C : It is an amount resulting from dividing your total tax liability by your taxable income for the year.

D : It is the number used to gross-up Canadian dividend income.

Answer: A