CIFC Types of Investment Funds 2

Question 1

Which type of investment fund issues a fixed number of shares that trade on a stock exchange?

Accepted Answer

Closed-end fund

Answer

Open-end mutual fund

Answer

Segregated fund

Answer

Money market fund

Question 2

A segregated fund is best described as:

Accepted Answer

An insurance product that combines investment with a maturity or death benefit guarantee

Answer

A fund that segregates equity from fixed income assets

Answer

A fund restricted to accredited investors only

Answer

A mutual fund with a fixed investment term

Question 3

What is the primary characteristic of a money market fund?

Accepted Answer

It holds short-term, high-quality debt instruments to preserve capital

Answer

It invests in long-term government bonds for maximum yield

Answer

It tracks a stock market index with no active management

Answer

It guarantees a fixed rate of return over a specified term

Question 4

How does a labour-sponsored investment fund (LSIF) differ from a conventional mutual fund?

Accepted Answer

LSIFs invest in small and emerging Canadian businesses and offer federal and provincial tax credits

Answer

LSIFs invest exclusively in government bonds

Answer

LSIFs are only available to institutional investors

Answer

LSIFs have no redemption restrictions

Question 5

Which statement about exchange-traded funds (ETFs) is CORRECT?

Accepted Answer

ETFs trade continuously on a stock exchange throughout the trading day

Answer

ETFs can only be purchased directly from the fund company

Answer

ETFs are priced only at the end of each trading day like mutual funds

Answer

ETFs must be actively managed by a portfolio manager

Question 6

A fund of funds is characterized by:

Accepted Answer

Holding shares of other mutual funds rather than individual securities

Answer

Investing directly in individual stocks and bonds

Answer

Offering a guaranteed return based on a benchmark index

Answer

Restricting investments to a single industry sector

Question 7

When a closed-end fund's shares trade at a price below its net asset value (NAV), the fund is said to be trading at a:

Accepted Answer

Discount

Answer

Premium

Answer

Par

Answer

Redemption price