Maalik opens an account for a new client, John. During the new account process, Maalik determines that he will need to confirm John's identity. Which of the following statements about Maalik's identification requirements is CORRECT?
Correct Answer: A
The statement that is correct about Maalik's identification requirements is option A. According to Section 7 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), registered firms and individuals must report any suspicious transactions or attempted transactions to FINTRAC, which is Canada's financial intelligence unit that collects, analyzes, and discloses information related to money laundering and terrorist financing activities. A suspicious transaction or attempted transaction is one that there are reasonable grounds to suspect that it is related to a money laundering or terrorist financing offence. Therefore, if Maalik determines that there is anything suspicious about John's transaction, he must report the matter to his dealer, who must report it to FINTRAC within 30 days of making the determination. The other statements are not correct about Maalik's identification requirements. Option B is false because Maalik does not need to report John as a PEFP to his dealer; rather, he must take reasonable measures to determine whether John is a PEFP or a family member or close associate of a PEFP, and if so, he must obtain senior management approval before opening an account for John, take enhanced measures to verify John's identity, and conduct enhanced ongoing monitoring of John's account activity. Option C is false because Maalik does not need to collect personal information about John and report it to his dealer if John wants to make a large cash deposit; rather, he must verify John's identity using an original, valid, and current document or information from a reliable source, keep a record of John's name and address and the date and amount of the deposit, and report any large cash transactions of $10,000 or more in Canadian currency or its equivalent to FINTRAC within 15 days of receiving the cash. Option D is false because Maalik does not need to report the attempt to his dealer if John attempts to make a suspicious deposit; rather, he must report the attempt directly to FINTRAC within 30 days of detecting the suspicion, regardless of whether the transaction was completed or not. References: [FINTRAC - Home], [FINTRAC - Reporting], [FINTRAC - Guideline 2: Suspicious Transactions], [FINTRAC - Guideline 6A: Record Keeping and Client Identification for Financial Entities]
Question 142
What is an example of a direct investment?
Correct Answer: A
Direct investment means the investor owns the asset directly, e.g., real estate property, stocks, or bonds held personally. Mutual funds (B) are indirect investments since they pool money. Government bonds (C) can be direct if held individually, but in CSC context, examples of direct investments often emphasize real estate ownership as the clearest form. Advisor purchases stocks for a client (D) is indirect because the advisor acts on behalf of the client.
Question 143
Kerry's total income this past year was $100,000 and she claimed a tax deduction of $2,000. When the tax return is filed, what would be the federal tax payable when applying the following federal tax rates? (Round to the closest whole dollar for the final answer.)
Correct Answer: B
Kerry's taxable income would be $98,000 ($100,000 - $2,000). Using the federal tax rates provided in the image, the first $48,535 of her income would be taxed at 15%, the next $48,534 at 20.5%, and the remaining $931 at 26%. This would result in a total federal tax payable of $18,754. You can see the calculation in detail below: Taxable Income Marginal Tax Rate Federal Tax Payable $0 - $48,535 15% $7,280.25 $48,536 - $97,069 20.5% $9,934.47 $97,070 - $98,000 26% $539.80 Total $18,754.52 Note: The final answer is rounded to the closest whole dollar. 1: Canadian Investment Funds Course, Unit 8, Section 8.2; [4]
Question 144
You are comparing the performance of ABC Equity Fund and XYZ Equity Fund to their benchmark. Indicate the correct statement. Return|Year 1|Year 2|Year 3|3 Year Compound Return Benchmark | -2.0% | 12.6% | 20.6% | 10.0% ABC Equity Fund | -10.0% | 16.0% | 24.0% | 9.0% XYZ Equity Fund | 8.0% | 9.0% | 10.0% | 9.0%
Correct Answer: A
Comprehensive and Detailed Explanation From Exact Extract: Fund XYZ's more consistent annual returns (less variation) reduce the likelihood of selling at a loss, especially in volatile markets. The feedback from the document states: "After finding comparable funds with good long-term performance, look for funds with the best performance from year to year. In comparing two funds, the one with less variation in simple rates of return from year to year is a more consistent performer. Although equity funds are intended for the long-term, if liquidity is needed, the fund with a more consistent performance is less likely to be sold at a loss." Reference:Chapter 15 - Selecting a Mutual FundLearning Domain:Evaluating and Selecting Mutual Funds
Question 145
An investor owns equity mutual funds and is concerned about overall fund expenses. She prefers investment options that have lower management expense ratios, along with the opportunity for higher returns. What is the most appropriate fund type for this investor?
Correct Answer: A
The investor in this scenario is concerned about fund expenses (MERs) and prefers a product with lower costs and potential for higher returns. According to the CSC materials, exchange-traded funds (ETFs) are known for having: * Significantly lower management expense ratios (MERs) compared to mutual funds and most other managed products, because they are generally passively managed and do not bear the high costs of active portfolio management. * Lower trading costs due to the in-kind creation and redemption process, which reduces the need for the fund itself to buy and sell securities. * Opportunities for higher returns as lower costs directly enhance net returns to investors. In contrast: * Segregated funds (B) are insurance products with higher fees due to guarantees. * Hedge funds (C) typically charge very high fees (often 2% management + 20% performance fees). * Liquid alternatives (D) also come with higher MERs and are designed for diversification and risk management, not necessarily for low cost. Therefore, the most appropriate choice is Exchange-traded funds (ETFs), as they best meet the investor's preference for low MERs and potential for higher returns.
