36 Questions
Which type of investments are typically included under the medium risk rating?
Investments in blue chip and mid cap equities
What type of investors are categorized under the high risk rating?
Growth-oriented investors willing to accept significant short-term fluctuations
What is a characteristic of investments under the medium-high risk rating?
Investments in smaller companies like Canadian small cap equities
What type of risk are investors under the low-medium risk rating generally willing to accept?
Low to medium volatility with some fluctuations
Which type of investments are typically included under the high risk rating?
Investments in smaller companies and specific market sectors
What is the primary objective of Growth Investors?
Achieving capital appreciation
Which type of investor is willing to take on a high level of risk for maximum returns?
Speculation Investor
What type of investments are commonly associated with Speculation Investors?
Emerging markets investments
What instruments are commonly used by hedge funds as part of their trading strategies?
Laboursponsored venture capital funds
Why is it important for dealers to identify the relative importance of each investment objective within a client's account?
To better tailor investment strategies to client goals
What are some examples of investments under the high risk rating mentioned in the text?
Emerging markets and science & technology
Which of the following strategies are mentioned as part of speculative trading strategies in the text?
Day trading
What is the main concern highlighted in the text about the relationship between risk and return?
Clients expect high returns without considering the associated risks
What is the recommended approach when a client's desire for returns does not align with their risk profile, as per the text?
Follow prescribed steps to protect the client from assuming too much risk
In what way can higher expected returns be associated with higher risk according to the text?
Higher expected returns inherently come with higher risk
What is the primary obligation of a Dealing Representative towards a client wishing to invest in high-risk speculative investments?
Discourage the client from selecting investments that may negatively impact their financial situation.
What critical factor should a Dealing Representative consider when assessing a client's financial circumstances?
The client's liquidity needs.
Why is it important for a Dealing Representative to collect and compute additional financial information about a client when considering leverage?
To assess the client's ability to meet debt obligations.
In the context of leverage, what does TDSR stand for?
Total Debt Service Ratio
Why should a Dealing Representative assess a client's ability to meet debt obligations before considering leveraged investing?
To prevent financial difficulties for the client.
What is one of the tools commonly used to assess a client's risk profile?
Questionnaires
In terms of risk profile, what does the 'low' rating imply about an investor?
They are willing to accept lower returns.
How many levels of risk profiles do some mutual fund dealers typically have?
5: Low, Low-Medium, Medium, Medium-High, and High
What type of investments are typically associated with a 'low' risk profile?
Cash and equivalents, GICs, money market investments
Why is it important for dealers to establish definitions related to risk profiles?
To have clarity in assessing investors' risk tolerance
For clients with low income, why is it generally not suitable to expose them to potential losses from higher risk securities?
To preserve their principal
Why might clients with significant life events, like losing a job or buying a house, need to depend on their investments?
To maintain liquidity
What is a critical factor in assessing a client's financial condition according to the text?
Net worth
Why would a leveraging strategy be generally unsuitable for a client with low income?
To preserve principal
How can knowing a client's net worth help determine investment choices?
By assessing risk profiles
What is the main criteria for assessing whether an investment or investment strategy is suitable for a client?
Client's investment needs and objectives
Investors seeking safety aim to:
Preserve their principal investment
Which type of investments are suitable for investors seeking income?
Fixed income and money market investments
Balanced investors typically aim to:
Seek a combination of income and growth
What is the primary objective of investors seeking safety?
Preserve their principal investment
Which type of investments are less important for income-oriented investors?
Equity investments
Test your knowledge on investment risk ratings including low-medium risk and medium risk categories. Learn about different investment options with varying volatility levels, suitable for investors seeking different levels of growth.
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