Sagira is a Compliance Officer with WealthPath Investments Inc., a registered mutual fund dealer.
Sagira routinely answers inquiries from the firm's Dealing Representatives and offers guidance.
Which of the following statements would Sagira likely agree is a permitted activity for Dealing
Representatives to have with clients?
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Correct Answer:
A
Q: 2
Xian-Li believes she is a sophisticated investor. She has constructed her own portfolio and has had
some success. She does not believe in studying a company’s details such as earnings, expenses, or
assets. She is more concerned with patterns in a company’s stock price over time. She believes
patterns form and can be used to predict future movements in the market.
How does Xian-Li evaluate the companies in her portfolio?
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Correct Answer:
C
Q: 3
Yesterday, Mariana purchased mutual funds for the first time from Diablo, who is a Dealing
Representative for Horizon Financial. When Mariana mentions to her friend Marcus that she just
started to invest, Marcus confides that he experienced losses from mutual fund investing. Her initial
feelings of excitement have now changed to worry and regret. She wished she had talked to her
friend before investing and wonders if she can change her mind.
Which statement regarding the right of withdrawal applies?
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Correct Answer:
A
Q: 4
On January 3, John invests $500 in the Blue Sky U.S. Equity Fund. On July 1 of the same year, he
invests another $500 into the same mutual fund. Information about the net asset value per unit
(NAVPU) at the time of each transaction is provided below. Given this information, what will be the
value of John's investment on December 31 of this year (please ignore transaction costs and
distributions)?
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Correct Answer:
C
Q: 5
You are meeting a potential client, William, for the first time. He is a high net worth individual and
you are keen to get his business. Which of the following would you consider the most important to
create an impressive first impression on your potential client?
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Correct Answer:
A
Q: 6
David had $10,000 in his investment account with Dynamic Investments, a mutual funds dealer. On
June 28, David wants to buy 500 units in ABC Canadian Dividend Fund that has a Net Asset Value Per
Unit (NAVPU) of $14.10. His friend Robert suggests that he may get a better price if he used the
strategy of dollar-cost averaging. David then instructs his Dealing Representative to place a purchase
order for 100 units on the first of every month starting July 1st for the next 5 months.
The orders are executed at the following NAVPUs.
July 01, $14.00
Aug. 01, $14.50
Sep. 01, $15.00
Oct. 01, $14.25
Nov. 01, $16.50
Did David get a better purchase price following the dollar-cost averaging strategy compared to
making a lump-sum purchase of 500 shares on Jun 28, 20xx?
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Correct Answer:
D
Q: 7
Every February, Reginald, a Dealing Representative, feels pressured by his Manager to generate new
registered retirement savings plans (RRSP) and contributions to assist the branch in meeting broader
business targets. Reginald is nearing the end of February, and he has a meeting with a new client,
Orel. Orel wants to open a tax-free savings account (TFSA) to develop emergency savings because he
does not want to worry about his withdrawals being taxed. Reginald suggests that if Orel were to
contribute to an RRSP first, then the resulting tax savings could be used to fund a new emergency
account.
In relation to account suitability, what can be said about Reginald’s advice?
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Correct Answer:
B
Q: 8
Ai Fen has recently become registered to sell mutual funds with Acadian Eastern Financial, a mutual
fund dealer. Ai Fen determined that with her background of being a Chartered Financial Analyst, she
can help people understand the nature of investing more easily than others in her field.
Which registration category will need to be prominently noted on Ai Fen’s business card to comply
with the “holding out rule”?
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Correct Answer:
A
Q: 9
Portia is a Dealing Representative with Highview Wealth Inc., a mutual fund dealer. Portia
recommends the Stature Growth Fund to her client Clive. Which of the following CORRECTLY
describes what Portia must do in order to satisfy her obligations under the Client Relationship Model
(CRM) and Client Focused Reforms (CFR)?
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Correct Answer:
C
Q: 10
Eleanora receives a $500 eligible Canadian dividend from her mutual fund. Her federal marginal tax
rate for the year is 29%. Assuming the enhanced gross-up of 38% and a federal dividend tax credit of
15.02%, how much federal tax will she pay on her dividend?
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Correct Answer:
C
Q: 11
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?
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Correct Answer:
D
Q: 12
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?
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Correct Answer:
D
Q: 13
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?
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Correct Answer:
D
Q: 14
Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?
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Correct Answer:
B
Q: 15
Which information is typically included in the Letter of Engagement?
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Correct Answer:
A
Q: 16
What is the role of a custodian?
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Correct Answer:
A
Q: 17
Quintin has been a Dealing Representative for Global Maximum Financial for 5 years. Today, he
opened an account for his new client, Reginald. In addition to opening a new account, Reginald
agreed to
accept Quintin's investment recommendation and placed a purchase order to buy units of the Global
Maximum Value Equity fund.
Quintin informed his Branch Manager Lupita about this new account on the same day the purchase
order was received. Lupita told Quintin that she would complete her review of the New Client
Application Form (NCAF) by no later than tomorrow.
Which statement regarding this new account opening is CORRECT?
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Correct Answer:
A
Q: 18
Catarina is a Dealing Representative for Ethical Financial which represents 20 different mutual fund
families. Darlene is a fund manager from one of those mutual fund families and wants to send a gift
card to Catarina as a symbol of appreciation. Ethical Financial's policies and procedures manual
(PPM) require that Catarina decline the gift.
What method of addressing conflict of interest is being used by Ethical Financial?
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Correct Answer:
C
Q: 19
Michael had invested in several mutual funds, most of which have appreciated in value. He is not
sure if he needs to report the gain as capital gains when he files his income tax return.
What would you tell Michael?
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Correct Answer:
A
Q: 20
Kendrick is a newly registered Dealing Representative for Oak Solid Financial. He has been assigned
the task of contacting existing clients where there has been no record of consultation within the last
12 months. The first person he sees on his list is a client named Chandra Ruffino. He double-checks if
her phone number is on the Do Not Call List (DNCL) registry. Which of the following statements
apply?
