Question 1

As an institutional salesperson, you are dealing with a client who lacks experience in derivatives but is interested in investing in them. The client insists they can handle the risks. What should you do?

Options :

A : Proceed with the transaction since the client is confident in their decision-making abilities.

B : Recommend that the client undergo further education on derivatives before making any investment.

C : Inform the client that they need to pass a suitability assessment before proceeding with the transaction.

D : Advise the client to diversify their portfolio instead of investing heavily in derivatives.

Answer: C

Question 2

An investor notices that their portfolio consistently outperforms the market, even after adjusting for beta. The investor suspects this outperformance is due to superior stock selection.What term best describes this outperformance?

Options :

A : Portfolio Alpha.

B : Beta Adjustment.

C : Diversification Effect.

D : Correlation Coefficient.

Answer: A

Question 3

Which of the following details is explicitly required in the Annual Information Form (AIF) but not typically included in the Simplified Prospectus?

Options :

A : The management fees charged by the fund.

B : The investment objectives and strategies of the fund.

C : The tax status of the issuer.

D : The historical performance of the mutual fund.

Answer: C

Question 4

Which of the following is true about first-order risks in alternative strategy funds?

Options :

A : First-order risks are mainly associated with operational risks in alternative strategy funds.

B : First-order risks primarily affect relative value and event-driven strategies.

C : First-order risks include liquidity, leverage, and default risks.

D : First-order risks are systematic and cannot be mitigated through diversification.

Answer: D

Question 5

An investor receives $500 in eligible dividends from a Canadian corporation. What is the net tax payable if the investor is taxed at a rate of 30%?

Options :

A : $207.

B : $250.

C : $103.

D : $60.

Answer: C

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