CIFC Types of Investment Funds 5

Question 1

Which investment fund structure is regulated under the Insurance Companies Act rather than provincial securities legislation?

Accepted Answer

Segregated fund

Answer

Segregated funds are insurance contracts governed by the Insurance Companies Act and provincial insurance legislation, not by securities regulators.

Question 2

A global equity fund differs from an international equity fund primarily because:

Accepted Answer

A global fund can invest worldwide including Canada and the US, while an international fund typically excludes the investor's home country

Answer

A global equity fund includes all countries (including North America), whereas an international fund typically excludes the investor's home market.

Question 3

An investor redeems mutual fund units before the fund's holding period expires and incurs a fee. This fee is called a:

Accepted Answer

Deferred sales charge (DSC) or redemption fee

Answer

A deferred sales charge (DSC) is a redemption fee paid by the investor when units are redeemed before the DSC schedule expires.

Question 4

What is the primary purpose of a 'fund facts' document under Canadian regulations?

Accepted Answer

To give investors a concise, plain-language summary of key facts about a mutual fund before purchase

Answer

The Fund Facts document is a two-page plain-language summary required by Canadian regulators that must be delivered to investors before or at the point of sale.

Question 5

Which of the following fund types is designed to profit in both rising AND falling markets?

Accepted Answer

Long/short hedge fund

Answer

Long/short hedge funds hold long positions in securities expected to rise and short positions in those expected to fall, allowing potential profits regardless of market direction.

(CIFC) Canadian Investment Funds Course Practice Test

(CIFC) Canadian Investment Funds Course Practice Test

CIFC Types of Investment Funds 5