KYC Obligations and New Client Application Form

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What type of investments fall under the medium risk rating?

Blue chip and mid cap equities (correct)

Investments in smaller companies

Investments with high volatility

Fixed income investments

Which risk rating applies to growth-oriented investors willing to accept significant short-term fluctuations?

Low-Medium

Medium

Medium-High

High (correct)

Investments under which risk rating include those that invest in smaller companies?

High

Medium-High (correct)

Medium

Low-Medium

Which risk rating applies to investors seeking moderate growth over a longer period of time?

Medium Signup and view all the answers

What type of investors does the medium-high risk rating apply to?

Growth-oriented investors Signup and view all the answers

Which investments are characteristic of the low-medium risk rating?

Fixed income investments Signup and view all the answers

For which risk rating are investors willing to accept significant short-term fluctuations for potentially higher returns?

High Signup and view all the answers

Who is ultimately responsible for reviewing and updating KYC information for clients?

The financial advisor Signup and view all the answers

What happens if the information on the KYC Form appears unreasonable given the client's circumstances?

The investigation into suitability disputes will go beyond the information on the KYC Form Signup and view all the answers

Who should review and approve the NCAF/KYC Form?

An officer, partner, director, or Branch Manager of the dealer Signup and view all the answers

What must be completed for each new client account that is opened?

Complete KYC information Signup and view all the answers

What is the purpose of the KYC Form during disputes?

To determine if the financial advisor knew the client and recommended suitable investments Signup and view all the answers

Who should receive a signed copy of the NCAF/KYC Form?

The client Signup and view all the answers

What is the purpose of the KYC process?

To ensure that recommended investments are suitable for the client Signup and view all the answers

What are some examples of investments under the high risk rating?

Science and technology, natural resources, and precious metals Signup and view all the answers

What type of funds may invest in derivatives, engage in short selling, or use leverage?

Hedge funds Signup and view all the answers

Why is it important for advisors to resist assessing a higher risk profile than necessary even when a client desires higher returns?

To protect the client from assuming too much risk Signup and view all the answers

In what form are risk profiles often expressed?

In numerical percentages Signup and view all the answers

Which of the following investments would most likely be classified under a high risk rating?

Investment in a hedge fund that uses leverage and derivatives Signup and view all the answers

What should advisors do when a client's desire for returns does not align with their risk profile?

Follow prescribed steps to protect the client from taking on too much risk Signup and view all the answers

Why do higher expected returns usually come with higher risk?

Because investors demand more risk for higher returns Signup and view all the answers

What guideline advises advisors against assessing higher risk profiles solely to meet client return expectations?

CP 31-103 Signup and view all the answers

Which of the following terms describes funds investing in emerging markets, science and technology, and precious metals?

High-risk funds Signup and view all the answers

What is the primary reason advisors are advised to resist assessing higher risk profiles than necessary?

To protect the client from taking on too much risk Signup and view all the answers

What is the primary concern for the Dealing Representative when an investor wishes to purchase high-risk speculative investments?

The potential negative impact on the investor's financial situation Signup and view all the answers

What does determining a client's liquidity needs involve?

Determining the client's ability to cover ongoing expenses and planned expenditures Signup and view all the answers

What are the reasons for determining if a client will use leverage or borrow to invest?

To assess the client's ability to meet debt obligations and to determine whether leveraged investing will be suitable Signup and view all the answers

What are the factors that a Dealing Representative must consider when assessing whether a client can tolerate potential losses from a high-risk investment?

The client's liquidity needs and borrowing capacity Signup and view all the answers

What is the primary role of a Dealing Representative when advising a client on investments?

Ensuring that the client can tolerate potential losses from high-risk investments Signup and view all the answers

What is the purpose of determining a client's liquidity needs?

To assess the client's ability to access their investments to meet their ongoing and short-term expenses Signup and view all the answers

What is the primary concern when a client wishes to use leverage or borrow to invest?

The client's ability to meet debt obligations Signup and view all the answers

What is the primary purpose of setting out investment goals for a client's account or portfolio?

To comply with regulatory requirements Signup and view all the answers

What should investment goals be set out in, according to the CP 31-103?

Terms that are specific and measurable Signup and view all the answers

What is an example of a client's investment need or objective?

To save for retirement Signup and view all the answers

What should a registrant consider setting out, according to the CP 31-103?

Investment return assumptions Signup and view all the answers

What is the purpose of an investment policy statement, according to the CP 31-103?

To develop investment goals for a client's account or portfolio Signup and view all the answers

Why is it important to set out investment goals in specific and measurable terms?

To ensure that investment goals are clear and achievable Signup and view all the answers

What should a registrant provide clients with, according to the CP 31-103?

An opportunity to express their investment needs and objectives in non-technical terms Signup and view all the answers