CIFC Types of Investment Funds 3

Question 1

Which type of fund is most suitable for an investor who wants broad market exposure with low management fees?

Accepted Answer

Index fund or ETF

Answer

Index funds and ETFs passively track a market index, providing broad exposure at lower costs compared to actively managed funds.

Question 2

A principal-protected note (PPN) linked to a mutual fund guarantees:

Accepted Answer

The return of the investor's original principal at maturity

Answer

A PPN guarantees that the investor will receive at least their original principal back at the maturity date, regardless of fund performance.

Question 3

Which of the following funds typically carries the HIGHEST investment risk?

Accepted Answer

Hedge fund using leverage and short-selling

Answer

Hedge funds often use leverage, short-selling, and complex derivatives, making them among the highest-risk investment fund structures available.

Question 4

A balanced fund is designed to:

Accepted Answer

Maintain a fixed mix of equities and fixed income to provide both growth and income

Answer

Balanced funds hold a diversified blend of equities and fixed income securities, aiming to balance capital growth with income generation.

Question 5

What distinguishes a specialty fund from other equity funds?

Accepted Answer

It concentrates its investments in a specific sector, region, or theme

Answer

Specialty funds focus on a narrow area such as technology, natural resources, or a specific geographic region, leading to higher concentration risk.

(CIFC) Canadian Investment Funds Course Practice Test