CIFC Types of Investment Funds 4

Question 1

An investor purchases units in an open-end mutual fund. How is the purchase price determined?

Accepted Answer

At the fund's net asset value per unit (NAVPU) calculated at the end of the trading day

Answer

Open-end mutual fund units are bought and sold at the NAVPU calculated at the close of business on the day the order is received.

Question 2

Which of the following best describes a target-date fund?

Accepted Answer

A fund that gradually shifts its asset allocation from growth-oriented to conservative as it approaches a target retirement date

Answer

Target-date funds automatically shift from equities toward bonds and cash equivalents as the target date (typically retirement) approaches.

Question 3

What is the key difference between a T-SWP (tax-efficient systematic withdrawal plan) and a regular SWP?

Accepted Answer

A T-SWP returns a portion of capital with each payment, potentially reducing tax compared to fully income-based withdrawals

Answer

T-SWP (T-class funds) make monthly payments that consist largely of a return of capital, deferring tax compared to SWPs that distribute fully taxable income.

Question 4

Which statement about real estate investment trusts (REITs) is CORRECT?

Accepted Answer

REITs pool investor capital to invest in income-producing real estate and are typically traded on stock exchanges

Answer

REITs allow retail investors to participate in income-producing real estate by purchasing units that trade on exchanges and distribute rental income.

Question 5

A 'clone fund' in the Canadian mutual fund industry refers to:

Accepted Answer

A fund that duplicates another fund's portfolio exactly using derivatives to gain foreign exposure

Answer

Clone funds use derivatives such as forward contracts to replicate the performance of a foreign fund within a Canadian fund wrapper, historically used to work around foreign content limits.

(CIFC) Canadian Investment Funds Course Practice Test

(CIFC) Canadian Investment Funds Course Practice Test

CIFC Types of Investment Funds 4