Danica is looking for a mutual fund to hold in her non-registered account that provides a regular stream of income with potential for capital growth. She is having difficulty distinguishing between bond funds and dividend funds. Which of the following statements is TRUE?

• A.Bond fund distributions receive more favorable tax treatment than that of dividend funds.
• B.Bond funds receive fixed interest payments from most of their investments.
• C.The return of dividend funds relies only on interest rates; whereas with bond funds, the return also depends on the general direction of stock markets.
• D.When interest rates rise, the net asset value per unit (NAVPU) of bond funds decreases; whereas with dividend funds it rises.

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Janine will celebrate her 71st birthday this year. She currently has a lot of money in a personal registered retirement savings plan (RRSP) and knows there are rules about what she can do with those funds. Which of the following is TRUE?

• A.She can purchase a registered term or life annuity.
• B.She can convert her RRSP to a registered retirement income fund (RRIF) this year or by December 31st of next year.
• C.She can convert her RRSP to a locked-in retirement income fund (LRIF).
• D.She can take the entire amount in cash, with no tax consequences because her RRSP funds were tax-sheltered.

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Lior is considering an investment that gains exposure to companies that trade on the Toronto Stock Exchange (TSX). He is not sure what the differences are between a Canadian equity fund and a Canadian dividend fund.
What would you tell him?

• A.Equity funds hold common shares while dividend funds hold only preferred shares.
• B.Dividend funds tend to be less volatile and lower risk than equity funds.
• C.Equity funds are more appropriate than dividend funds if Lior requires a steady flow of income.
• D.Dividend funds generate tax-preferred income while income from equity funds is fully taxable.

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Which of the following statements about your mutual fund registration is CORRECT?

• A.You must renew your registration through the online NRD system every two years.
• B.You must inform the regulatory authorities of any material or significant changes to your personal circumstances.
• C.You can sell mutual funds anywhere in Canada as long as you are registered with one of the provincial or territorial securities commissions.
• D.Your online application must be reviewed and approved by your mutual fund dealer before you can begin to sell mutual funds.

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Maxine is a portfolio manager who 15 years ago, purchased 100 shares of Never2Tacky, a social media corporation for Aspirations Global Technology Fund. She purchased the stock when it was trading at $10. Last year, the peak market price was $120. Presently, it is trading at $99. News agencies are now reporting that additional regulations regarding social media companies are about to be agreed upon by G7 countries. Maxine is concerned the market value of Never2Tacky is going to drop. She buys a put option with an exercise price of $95 with an expiry of 9 months.
What type of strategy is Maxine using?

• A.Hedging
• B.Speculating
• C.Passively managing
• D.Modern portfolio theory

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