Mutual Fund Administration Unit 8

What is the role of the auditor in terms of a mutual fund's financial reporting requirements?

The auditor motivates the mutual fund’s accounting department, helping them avoid delays.

The auditor is required to confirm annually that proper valuation techniques were employed.

The auditor can create his or her own financial statements for the mutual fund, to use for comparison purposes.

The auditor’s independence guarantees that no fraud can be committed.

Aileen Grogan is considering investing in mutual funds but has some concerns since she recently read about an investment house going bankrupt. She wants to know how her mutual fund investment would be protected should her investment fund manager declare bankruptcy. Which of the following statements is CORRECT?

Aileen's mutual fund dealer protects her assets by holding them in their trust accounts.

Aileen could approach the Ombudsman for Banking Services and Investments (OBSI) to compensate her for any losses.

Any mutual fund investment she makes would be held by a custodian, separate and apart from the investment fund manager.

A mutual fund's independent review committee is responsible for ensuring the mutual fund is financially viable.

What are the delivery requirements for mutual fund disclosure documents?

All investors must receive the simplified prospectus within two days of a mutual fund purchase.

All investors must receive the annual information form within a week of a mutual fund purchase.

All investors must receive the fund facts document within two days of a mutual fund purchase.

There are no delivery requirements. All documents are available upon client request.

Phuong has a $1,500 tax refund and would like to invest it in the LACROIX Capital Fund. It currently has a net asset value per unit (NAVPU) of $5.75 and her dealing representative will sell the fund with a front-end sales charge of 1.5%. If she invests today, how many units would she purchase?

256.9565

260.8109

260.8696

264.7826

What is the main role of a mutual fund’s Independent Review Committee (IRC)?

To retain the external auditor for the investment fund manager and oversee its mandate

to conduct reviews of the investment fund manager's corporate governance and provide its opinion

to review any and all conflict of interest matters and proposed actions that it receives from the investment fund manager

to ensure independence in reporting of the investment fund's financial statements

What statement regarding registered education savings plans (RESPs) is CORRECT?

If the designated beneficiary does not pursue post-secondary education, the subscriber will forfeit principal contributions to the plan.

Although there is a lifetime maximum contribution limit of $50,000 per beneficiary, there is no annual limit.

RESP contributions are tax deductible for the subscriber.

Canada Education Savings Grants (CESGs) are only available to those with low family incomes.

Which of the following statements about net asset value per unit (NAVPU) is TRUE?

Most funds calculate NAVPU weekly.

NAVPU equals total assets minus total liabilities divided by units outstanding.

The price for a mutual fund is based on the NAVPU prevailing on the settlement day.

Assets of the fund include redemption amounts owed to investors.

John Smith invested $100,000 in a Canadian equity mutual fund and paid a 4% front-end sales charge. The net asset value per unit (NAVPU) of the fund at the time of purchase was $10. John decides to set up a ratio withdrawal plan under which he receives an annual payment at the end of each year based on 8% of the market value of his investment at the time of the withdrawal. His first withdrawal is due when the fund is valued at $11.75 per unit. Approximately what amount does John withdraw this year?

$8,000

$9,024

$9,400

$11,280

Last year, Clarence contributed $5,000 to his tax-free savings account (TFSA). This year, he withdrew the entire $5,000 plus $200 income that had accumulated from his initial contribution. He made no contribution to his TFSA this year. How much may he contribute to his TFSA next year? Assume the maximum contribution amount is $5,000 for all three years.

$5,000

$10,000

$15,000

$15,200

Unlock and Upgrade

Remove all limits from your Quizzes

Mutual Fund Administration Unit 8

More Quizzes