Seg Mock Exam 2 Latest Update -

Seg Mock Exam 2 Latest Update - Actual Exam Questions and 100% Verified Correct Answers Guaranteed A+

Alison is a small business owner. Her business fortunes fluctuate and she has managed to save some funds in an equity segregated fund. She deposits additional funds to her segregated fund account whenever she has extra money. Alison's business relies heavily on credit from various financial institutions to help with the working capital requirements. She has personally guaranteed some of the loans. She has named her daughter as the beneficiary of her segregated account, which has a 75% death-benefit guarantee.

Based on Alison's current situation, which of the following is the most important feature of her segregated fund?

a) Creditor protection

b) Maturity guarantee

c) Death-benefit guarantee

d) Resets - CORRECT ANSWER: (correct)Creditor protection

Rationale:

Alison's business has loans that she has personally guaranteed. In the event that she has to declare bankruptcy, her segregated fund cannot be seized to compensate her creditors. (Refer to Section 2.1.10)

application and collected a client cheque for $5,000. She spent time properly reviewing the details of the contract and explained to her clients the different fees associated with their fund selection. After emailing them the information folder, Margaret went through the questions that they still had. She then completed the application, obtained the clients' signatures, and submitted the signed application.

What does Margaret still have to do?

a) Make sure that she completes the politically exposed foreign person form and verifies

their identification.

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b) Submit a rider election form because the clients have guaranteed maximum

withdrawal benefits.

c) Write the contract number on the cheque and send it to the insurer immediately.

d) Set up the next annual review with the client before she leaves so that they know she

will be closely monitoring their accounts. - CORRECT ANSWER: Write the contract

number on the cheque and send it to the insurer immediately.

Rationale:

Margaret collected a cheque from her clients and still needs to write the contract number on the cheque and make sure that it is handled securely. It must be submitted to the insurer immediately. (Refer to Section 6.3.3.5)

Cheryl is a biology professor. She has been working at a local university for the last 20 years and earns an annual salary of $130,000. She was not satisfied with her previous financial advisor so she agrees to meet with a new agent, Scott, to review her Defined Contribution Pension Plan (DCPP) and Registered Retirement Savings Plan (RRSP) investments, which are mostly Guaranteed Investment Certificates (GICs) and bond funds. Since the idea of owing money makes her uncomfortable, Cheryl does not have any debt.

Wanting to demonstrate his level of expertise to his potential new client, Scott discusses the advantages of RRSP contributions to benefit from tax deductions at her current marginal tax rate (MTR), how an RRSP is converted to a Registered Retirement Investment Fund (RRIF) at retirement, the usefulness of investing in a TFSA, and reviews the management expense ratios (MERs) on her bond funds. He also shows

Che - CORRECT ANSWER: (corect) Low level of financial literacy

Rationale:

Scott cannot assume that Cheryl has a good level of understanding of financial matters.The type of investments she currently holds and the fact that she is frustrated after hearing financial jargon points to her low level of financial literacy. (Refer to Section

4.2.4.1)

Colleen has come into a large amount of money that she is interested in investing in segregated funds. She would like to diversify her investment by putting her money into several funds: one should offer only distribution, one should allow her to own property, and one should focus on only ethical funds.

Which collection of funds will meet Colleen's needs?

a) Specialty funds, dividend funds, and real estate funds

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b) Income funds, mortgage funds, and specialty funds

c) Dividend funds, equity funds, and real estate funds

d) Property funds, fund of funds, and income funds - CORRECT ANSWER: (wrong)

Income funds, mortgage funds, and specialty funds

Rationale:

The following funds will meet Colleen's needs:

Specialty funds: created to fill a niche needs for an investor like ethical funds, industry- specific funds or geographically specific funds Dividend funds: offer investors a distribution that is a percentage of a company's profits Real estate funds: earn income from mortgages and capital and also allow investors to own property (Refer to Section 2.2.6, 2.2.8, 2.2.11)

Cory is a manager of a food transformation plant where the average salary is $40,000.In an effort to keep his best employees, he is looking to implement a group plan for retirement savings. The company is willing to contribute on behalf of the employees in this plan, as long as the employees contribute as well. It is important to Cory that the company contributions are stable and do not incur additional charges. He also wants to make sure that the money invested goes towards retirement and not other purchases.

What type of group plan is best suited for Cory's company?

a) Define Contribution Pension Plan (DCPP)

b) Group Registered Retirement Savings Plan (GRRSP)

c) Group Tax-Free Savings Account (TFSA)

d) Deferred Profit Sharing Plan (DPSP) - CORRECT ANSWER: (correct) Define

Contribution Pension Plan (DCPP)

Rationale:

A DCPP will ensure that the investments made in the plan are for retirement because of the locked-in provision. Employer contributions will be stable since it is a fixed percentage of employee salaries. Furthermore, the employer contributions will not trigger additional payroll taxes as they would with a GRRSP. The company can request that employees contribute to the plan, which is not possible with a DPSP. (Refer to Section 8.2.2.2)

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