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SFA - SEGREGATED FUNDS AND ANNUITIES (advocis material) QUESTIONS AND ANSWERS
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SFA - SEGREGATED FUNDS AND ANNUITIES(advocis material) QUESTIONS AND
ANSWERS
front end load - ANSWER The investor who pays a _______pays no
further sales fee if she redeems units during the term of the contract.
Registered retirement savings plan - ANSWER A segregated fund in a
_____is bound by the rule that apply to all_____. Therefore, the oldest
age at which a contract can begin as an _____is 71, deposits can be
made untill December 31 of the year in which the contract owner turns
71 Then, the _____is converted to a registered retirement income fund
(RRIF).
Registered account - ANSWER Deposits or premiums paid into a non
registered account or TFSA are not tax-deductible, however, they are
tax-deductible when paid into a _____, except when the account is a
RESP or RDSP.
Payout annuities - ANSWER Annuities that pay an income are called
_____, they are differentiated by whether the payout begins immediately
or at a future date (deferred annuity).
indexed - ANSWER Once annuity payments start, they generally cannot
be stopped before the end of the payment period. Each annuity payment
is the same unless the annuity is _____or variable. Most annuities are
issued with a set, or level payment.
Creditor Protection - ANSWER If a contracts owner surrenders her term
annuity and receives its commuted value, ____would no longer exist for
the sum received.
Future Value - ANSWER _____is calculated as follows :
,PV x (1 + interest) ^n
inception - ANSWER Once all approvals are in place, the fund is open
for investment. The date when the fund begins operation is its
_____date.
Segregated funds - ANSWER Insurers keep their _____separate from
other company assets, thus giving them their name.
Guaranteed investment certificates - ANSWER Some investments
guarantee that the full amount invested will be repaid plus a profit. These
investments include _____, and some bonds.
Nominal Return - ANSWER Real return is calculated as the _____on an
investment minus the rate of inflation.
Bonds - ANSWER The three main asset classes are stocks, cash, and
_____. Two other classes are often added, they are real estate and
commodities.
Present value - ANSWER _____is calculated as
FV % (1 + interest) ^n
funds of funds - ANSWER Some segregated funds invest in other
segregated funds, these are called _____.
Maturity guarantee - ANSWER Prior to contract maturity, an investor can
lose up to the sum invested since the _____does not apply. The investor
must also be prepared for the minimum 10 year term of the investment.
The investor may be unable to take advantage of other investment
opportunities during those 10 years.
Annuity payment - ANSWER When the ______at the time of purchase is
fixed, that payment will be received for the duration of the annuity. It is
guaranteed. If interest rates rise or fall the______remains constant.
Investment grade bonds - ANSWER The highest rated bonds are
called______. They have a AAA rating. On the other end of the
, spectrum are bonds that are most likely to default on repayment. They
are called high yield or junk bonds, which are BB or lower.
Canadian investors protection fund - ANSWER Similar to the protection
provided by assuris on the life insurance side, investor protection for
stock investors is provided by the ______incase of investment dealer
insolvency.
Canadian deposit insurance corporation - ANSWER The ______is a
federal Crown corporation that insures savings accounts at member
institutions, such as banks, up to $100,000.
CRM2 - ANSWER ______requires mutual funds to provide additional
written communication to clients, an annual report on costs and fees,
and an annual report on performance. This disclosure is intended to
ensure investors thoroughly and accurately understand their fund
investment.
Cut off date - ANSWER Contributions can be made to an RRSP
throughout the year. The CRA establishes a date, usually 60 days after
December 31, as the ______for contributions for the previous year. The
annual contribution limit is the lesser of 18% of earned income for the
previous year or the maximum dollar limit established for the year.
Know your client - ANSWER A new account application form is
completed in which the investor specifies the fund in which he will invest,
and ______information is gathered by the sales representative.
Interest rate - ANSWER ________is the primary risk of an annuity
investment. If ________s rise after the contract is finalized, the investor
cannot benefit from the higher rate. The investor may also be subject to
inflation risk.
Fund Facts - ANSWER ______outlines the potential benefits, risks, and
costs on investing in a mutual fund, in language investors can easily
understand, at a time that is relevant to their investment decision.
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