Francis wants to redeem his US Asset Allocation Fund as he needs the money for a down payment for a home purchase. The current proceeds from the redemption are USD $27,859, and the current CAD/USD exchange rate is 0.7353.
How much will Francis receive in Canadian dollars when he redeems the Funds? Please round your answer to the nearest dollar.

• A.$37,888
• B.$36,698
• C.$42,861
• D.$35,859

Correct Answer: A

Explanation
A is correct because Francis will receive $37,888 in Canadian dollars when he redeems the Funds. This is calculated by dividing the current proceeds from the redemption in US dollars by the current CAD/USD exchange rate and rounding to the nearest dollar. That is,

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Danny is a Dealing Representative for Everbright Investments. He met with his client Adele, who has
$1,000,000 to invest. During their meeting Danny determines that Adele has a high-risk profile. In addition, he learns that she has an excellent understanding of equities and how volatile they can be. Danny is considering recommending growth funds specifically, and making a recommendation from the following investment options:

Based on the information provided, which mutual fund should Danny recommend?

• A.ABC Global Equity Fund.
• B.DEF European Equity Fund.
• C.LMN Asia Pacific Equity Fund.
• D.Invest equally in all 3 funds.

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Which of the following are obligations on mutual fund dealing representatives imposed by The Proceeds of Crime (Money Laundering) and Terrorist Financing Act?

• A.record-keeping of large transactions, account-related information, and other relevant records
• B.confirming client identity each time before concluding any transaction
• C.reporting all financial transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
• D.enhancing public awareness of matters related to money laundering and terrorist financing

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You are meeting a new client, Steven, and you are trying to determine his level of understanding of different investments. Which question would give you the most information regarding your client's familiarity with investing?

• A.Do you want to minimize taxes from your investments?
• B.What rate of return do you expect from investing?
• C.Do you understand the relationship between risk and return?
• D.Do you have the resources to invest for the long-term?

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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?

• A.After the distribution. Sean will have J&625 in cash and JB8.350 worth of the Penn Canadian Equity Fund.
• B.The total value of Sean's mutual fund holdings after the distribution and reinvestment is §9,875.
• C.The NAVPU of the mutual fund does not change after the distribution since Sean reinvests his distribution and purchases additional units.
• D.Sean's distribution is reinvested at a NAVPU of $19.75 and he receives approximately 31.65 additional units.

Correct Answer: D

Explanation
Sean's distribution is reinvested at a NAVPU of $19.75 and he receives approximately 31.65 additional units.
When a mutual fund declares a distribution, it reduces its NAVPU by the amount of the distribution per unit.
In this case, the NAVPU drops from $21 to $19.75 after the distribution of $1.25 per unit. Sean's distribution is $625 ($1.25 x 500 units), which he reinvests in the mutual fund at the new NAVPU of $19.75. He receives

additional units. The total value of Sean's mutual fund holdings after the distribution and reinvestment is (500+31.65)×19.75=$10,500
, not $9,875. The NAVPU of the mutual fund does change after the distribution, regardless of whether Sean reinvests his distribution or not. References: [Unit 7: Mutual Funds Administration]

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