39 Questions
What does KYC stand for in the financial industry?
Know Your Customer
Which obligations are outlined under the KYC rule mentioned in the text?
Establish Client Identity, Collect Sufficient Information, Assess Suitability
Why is it important to gather KYC information according to the text?
To truly understand clients' needs and make suitable recommendations
What additional information must be collected apart from KYC requirements?
Tax Reporting, Money Laundering, and Privacy Information
Which is NOT included in the information collected to satisfy the KYC obligation?
Client's favorite color
What is a core duty of every Dealing Representative as per the text?
Knowing and understanding clients by collecting essential information
Why are the KYC, KYP, and suitability obligations crucial for Dealing Representatives?
To make suitable recommendations and provide adequate service
What could be the consequence of not adequately gathering KYC information about clients?
Inability to provide suitable recommendations or adequate service
What aspect of a client's financial circumstances should a Dealing Representative consider when determining if high-risk speculative investments are suitable for the client?
Liquidity needs
Why is it important to determine if a client will use leverage or borrow to invest?
To assess the client's ability to meet debt obligations
What financial criteria is collected to evaluate a client's ability to meet debt obligations when considering leveraged investing?
Total debt service ratio (TDSR)
How does a client's liquidity impact their potential suitability for high-risk speculative investments?
It affects their ability to cover short-term expenses
What information should a Dealing Representative collect to determine if leverage will be suitable for a client?
Net worth and liquid net worth
In what scenario should a Dealing Representative discourage a client from selecting high-risk speculative investments?
When the client's liquidity may not cover short-term expenses
Why does a Dealing Representative need to ascertain a client's liquidity needs before recommending investments?
To ensure the client can meet ongoing expenses
What factor should a Dealing Representative consider when evaluating a client's leverage use for investments?
Total debt service ratio (TDSR)
What is a common method used to assess a client's risk profile according to the text?
Documenting questions and answers
How many levels of risk profile are mentioned for mutual fund dealers in the text?
5 levels
Which of the following investments is typically associated with a 'Low' risk profile?
GICs
What does the 'Low-Medium' risk rating cater to according to the text?
Investors seeking a balance between safety and return
When assessing a client's risk profile, what is expected from dealers regarding definitions?
Have definitions related to risk profile
Which investment is NOT typically associated with a 'Low' risk rating?
Highly volatile stocks
What is a key reason some investors are categorized under a 'Low' risk profile according to the text?
Willingness to accept low returns
What is emphasized as crucial for determining a client's risk profile according to the text?
Using approved questionnaires
What is the primary reason for not substituting your own judgment for the client's regarding risk profile?
To ensure the client's comfort level is reflected in the KYC
What does the time horizon of an investment typically depend on?
The client's individual objectives
What is the primary purpose of recording time horizon in ranges on the KYC Form?
To provide a general idea of the investment timeframe
Which of the following time horizons is considered short-term?
< 1 year
What happens when the client needs access to a significant portion of the invested money?
The time horizon is reached
Why is it essential to understand the client's time horizon?
To create a tailored investment strategy
What is the general range for a medium-term time horizon?
3-5 years
What happens when the client's time horizon is short?
The investment is more conservative
What is the estimated time required to complete Unit 3: Know Your Client, Know Your Product, and Suitability?
1 hour and 30 minutes
What is the main obligation of Dealing Representatives according to the suitability process?
To ensure orders are suitable for their clients
What is the primary focus of Lesson 1: Overview of the Suitability Process?
The obligations in the suitability process
What is the purpose of the Know Your Client (KYC) process?
To determine the client's investment goals
What is the estimated time required to complete Lesson 1: Overview of the Suitability Process?
10 minutes
What is the primary focus of Know Your Product (KYP)?
Understanding product features
What is the purpose of the suitability process?
To ensure orders are suitable for clients
Learn about the suitability requirement in the Canadian Investment Funds Course Unit 3, which covers the Know Your Client, Know Your Product, and Suitability Introduction. Explore the steps to make suitable recommendations for clients.
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