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

Closed-end funds issue a fixed number of shares through an IPO, after which shares trade on a stock exchange at market prices.

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

Segregated funds are insurance contracts that provide investment growth potential along with a guarantee of at least 75–100% of premiums at maturity or death.

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

Money market funds invest in short-term, highly liquid, and high-quality instruments such as T-bills and commercial paper to preserve capital.

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 in small and emerging Canadian companies and provide investors with federal and provincial tax credits, but typically have an 8-year holding period.

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 trade on a stock exchange throughout the day at market prices, unlike mutual funds which are priced once daily at NAV.

(CIFC) Canadian Investment Funds Course Practice Test

(CIFC) Canadian Investment Funds Course Practice Test

CIFC Types of Investment Funds 2