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?

• A.Taline's risk profile should be "hiqh"" because she is willingto accept risk in order to maximize her investment returns.
• B.Faruq should assess Taline's risk profilebased on the higher of her: (1) risk tolerance and (2) risk capacity
• C.Taline's risk profile should be"low" because her risk capacityis low and she cannot afford lame investment losses.
• D.Faruq should override the risk that Taline is able to accept because her return expectations cannot otherwise be met.

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Sarah and Kyle are a married couple. They are both 34 years of age and work as teachers. Their combined annual income is $130,000. They are able to save $800 each month. They own a home worth $340,000 with a
$120,000 mortgage. Since they work for the same employer, they have the same defined benefit pension plan.
Other than a tax-free savings account (TFSA) in Kyle's name with $5,000, they do not have any other assets.
They are avid sailors and want to save towards a purchase of a sailboat. For the type of sailboat they want, they estimate it should cost around $65,000. They want you to recommend an investment for their monthly savings to help them achieve their goal faster.
What question should you ask them next?

• A.How much do you make individually each year?
• B.What is your net worth?
• C.What is your investment objective for these savings?
• D.How would you feel if you lost part of your money in the short-term?

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Which of the following statements regarding mutual fund fees is correct?

• A.Trading commissions are paid from the management fee.
• B.The mutual fund dealer receives trailer fees based on the value of assets under management.
• C.Redemptions are made from units held by investors to pay trailer fees.
• D.Trailer fees are only paid to mutual fund dealers when a purchase is made.

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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?

• A.ETFs can be purchased continuously throughout the trading day while index funds can only be bought or sold at the end of the day.
• B.The market price of ETFs always matches the underlying basket of securities while there can be a discrepancy in pricing index funds.
• C.While ETFs are prone to tracking errors, index funds are perfectly aligned with their underlying index.
• D.ETFs do not have management fees since they are exchange traded while index funds do incur such fees.

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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?

• A.Identify how the proposed investment is in alignment with the investor's profile and holdings.
• B.Rely on the risk rating of the mutual fund when offering an investment solution.
• C.Show from past fund performance, that mutual fund costs are not important if there are high returns.
• D.Match the past rates of return of the mutual fund with what is the anticipated rate of return.

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