Managed Products Overview

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is required for a proposed annuitant to have their life insured?

  • A medical examination must be completed.
  • The proposed annuitant must consent in writing. (correct)
  • The contract holder must sign the policy.
  • The beneficiary must agree to the insurance.

Which statement accurately describes a revocable beneficiary designation?

  • It requires the beneficiary to have an insurable interest.
  • It cannot be changed without beneficiary consent.
  • It must be designated as irrevocable after the first year.
  • It allows the contract holder to revoke the beneficiary's rights. (correct)

What is the minimum maturity guarantee required by provincial legislation for segregated funds?

  • 100% of the amount invested if the contract term is 5 years.
  • 75% of the amount invested over a minimum 10-year term. (correct)
  • 50% of the amount invested over any contract term.
  • 100% of the amount invested with no term requirements.

Which of the following can be a beneficiary under a contract?

<p>An organization such as a charity. (D)</p> Signup and view all the answers

What characteristic is associated with segregated funds that increases the management expense ratio (MER)?

<p>Full maturity protection after longer terms. (A)</p> Signup and view all the answers

What percentage of maturity guarantee is typically associated with a 10-year holding period in segregated fund contracts?

<p>75% (D)</p> Signup and view all the answers

Which of the following statements accurately describes the reset dates for segregated fund contracts?

<p>Reset dates can be established as frequently as daily. (C)</p> Signup and view all the answers

What is one potential restriction insurers may impose for enhanced maturity guarantees?

<p>The insured person must not be older than 80 when issued. (A)</p> Signup and view all the answers

In a falling market, how does the maturity guarantee protect contract holders?

<p>By resetting the contract to the previous high value. (C)</p> Signup and view all the answers

What is the primary benefit of having a death benefit in segregated fund contracts?

<p>It provides protection against market volatility at the time of death. (D)</p> Signup and view all the answers

Which of the following accurately describes the relationship between death benefits and maturity guarantees in segregated funds?

<p>Both death benefits and maturity guarantees can be 100%. (D)</p> Signup and view all the answers

What determines the amount of death benefit payable at the time of death?

<p>The net asset value of the fund minus fees at the time of death. (D)</p> Signup and view all the answers

What is the maximum limit on illiquid assets for closed-end funds relative to their NAV?

<p>25% (C)</p> Signup and view all the answers

Which investment strategy is typically restricted in open-end funds but allowed in closed-end funds?

<p>Short selling (C)</p> Signup and view all the answers

Why might a portfolio of closed-end funds reduce risks associated with varying discounts?

<p>They have a low degree of correlation with each other. (A)</p> Signup and view all the answers

What is one advantage of closed-end funds over open-end funds regarding investment strategy?

<p>They allow for long-term investment strategies without liquid asset reserves. (D)</p> Signup and view all the answers

How are capital gains, dividends, and interest distributions typically managed in closed-end funds?

<p>They are paid directly to investors. (A)</p> Signup and view all the answers

What did the mutual fund modernization amendments to NI 81-102 achieve for closed-end funds?

<p>Aligned their investment restrictions with alternative mutual funds. (B)</p> Signup and view all the answers

What is the impact of a fixed number of units in a closed-end fund?

<p>It allows for easier tracking of capital gains and other distributions. (C)</p> Signup and view all the answers

Which statement best describes the liquidity requirements for closed-end funds compared to open-end funds?

<p>Open-end funds must maintain liquidity for potential redemptions. (C)</p> Signup and view all the answers

What condition allows existing closed-end funds to avoid the changes from the amendments?

<p>They are grandfathered as long as they do not make another public offering. (D)</p> Signup and view all the answers

What is a primary advantage of investing in a listed private equity company compared to traditional private equity investment?

<p>Better access to capital and liquidity (B)</p> Signup and view all the answers

Which of the following statements correctly describes the nature of a listed private equity firm's investments?

<p>Their investments can include both publicly traded and privately held companies. (D)</p> Signup and view all the answers

What transformation has occurred over the past decade concerning private equity companies?

<p>A significant number of private equity firms have begun listing on stock exchanges. (C)</p> Signup and view all the answers

Which financial market characteristic applies to shares of a listed private equity company?

<p>They can be purchased and sold like shares of any other publicly traded company. (A)</p> Signup and view all the answers

How does the structure of a listed private equity company typically differ from traditional private equity firms?

<p>They must adhere to regulatory and reporting requirements as publicly traded entities. (A)</p> Signup and view all the answers

In what ways can investors benefit from investing in a listed private equity company?

<p>They gain access to exclusive investment opportunities unavailable to retail investors. (C)</p> Signup and view all the answers

Which sector is NOT mentioned as part of ABC Corp's investment holdings?

<p>Technology (D)</p> Signup and view all the answers

Which of the following is a significant reason for the rise of listed private equity companies?

<p>Improved liquidity and transparency in investment processes. (B)</p> Signup and view all the answers

What describes ABC Corp's primary strategy in utilizing its capital?

<p>Targeting small to mid-size privately held investment opportunities. (A)</p> Signup and view all the answers

Flashcards

Beneficiary

The person(s) who will receive benefits from a contract after the annuitant dies.

Revocable Designation

A beneficiary designation that can be changed or canceled by the contract holder.

Irrevocable Designation

A beneficiary designation that cannot be changed without the beneficiary's consent.

Maturity Guarantee (seg. funds)

A promise that investors will receive at least a portion of their invested money (e.g., 75% or 100%).

Signup and view all the flashcards

Insurable Interest

A financial or other benefit derived from a person's life or health.

Signup and view all the flashcards

Maturity Guarantee

A guarantee of a specific portion of the investment's maturity value.

Signup and view all the flashcards

Death Benefit Guarantees

A guaranteed payout to a beneficiary in case of death of the contract holder, minimum amount, excluding fees.

Signup and view all the flashcards

10-Year Term

A period of 10 years for maturity guarantee contracts. Holding period for investment protection.

Signup and view all the flashcards

Guaranteed Maturity Amount

The minimum amount guaranteed to be paid on maturity.

Signup and view all the flashcards

Age Restrictions

Limitations on eligibility for enhanced guarantees based on the annuitant's age at the time of policy issuance.

Signup and view all the flashcards

Reset Dates (segregated funds)

Dates when the maturity guarantee on segregated fund contracts are reset for another 10 years when the term expires.

Signup and view all the flashcards

Daily Reset

Maturity guarantee recalculation done every day for a segregated fund to capture market gains or secure previous highs, locking in the value.

Signup and view all the flashcards

Closed-end Fund Modernization

Amendments to NI 81-102 in 2018 brought closed-end funds under similar investment restrictions as alternative mutual funds, including leverage, short selling, derivatives, and portfolio concentration. However, closed-end funds have a higher allowance for illiquid assets compared to alternative mutual funds.

Signup and view all the flashcards

Closed-end Funds: Illiquid Asset Limit

Closed-end funds are allowed to hold up to 20% of their net asset value (NAV) in illiquid assets, compared to 10% for alternative mutual funds. This limit can increase to 25% for a maximum of 90 days, compared to 15% for alternative mutual funds.

Signup and view all the flashcards

Closed-end Fund Diversification

Investing in a portfolio of closed-end funds with low correlation can reduce overall risk. The different funds' discounts tend to offset each other, smoothing out potential negative effects.

Signup and view all the flashcards

Closed-end Funds: Investment Opportunities

Closed-end funds provide opportunities for investment returns that may not be available in open-end funds, such as short selling.

Signup and view all the flashcards

Closed-end Funds: Higher Investment Level

Closed-end funds typically have a higher level of investment compared to open-end funds because they don't need to keep a large percentage of their assets liquid for redemptions.

Signup and view all the flashcards

Closed-end Fund: Long-term Strategy

Managers of closed-end funds have the flexibility to focus on long-term investment strategies without the need to reserve liquid assets for redemptions.

Signup and view all the flashcards

Closed-end Fund Distributions

Capital gains, dividends, and interest distributions from closed-end funds are paid directly to investors, rather than reinvested in additional units, making it easier to track the adjusted cost base.

Signup and view all the flashcards

Listed Private Equity Company

An investment company that trades on a stock exchange, using its capital to purchase or invest in other companies. These companies can be publicly traded or privately held.

Signup and view all the flashcards

Private Equity Firm

A company that invests in private companies or assets, often with the goal of improving their performance and eventually selling them for a profit.

Signup and view all the flashcards

Diversification

Spreading investments across different assets, industries, or companies to reduce risk.

Signup and view all the flashcards

What are the sectors of a private equity company's holdings?

Examples include real estate, finance, healthcare, and many more. The specific industries will vary depending on the company's investment strategy.

Signup and view all the flashcards

Advantages of Investing in Listed Private Equity

  1. Better access to capital: More investors can participate.
  2. improved liquidity: Easier to buy and sell shares.
Signup and view all the flashcards

Disadvantages of Investing in Listed Private Equity

While promising returns, it comes with inherent risks that could lead to losses. You should thoroughly research and understand the company's investment strategy.

Signup and view all the flashcards

Publicly Traded Companies

Companies whose shares are bought and sold on a stock exchange.

Signup and view all the flashcards

Privately Held Companies

Companies whose shares are not traded on a stock exchange and are typically owned by a limited number of people.

Signup and view all the flashcards

Regulatory and Reporting Requirements

Rules and guidelines that publicly traded companies must follow, including financial disclosures and transparency.

Signup and view all the flashcards

Study Notes

Other Managed Products

  • Additional types of managed products include their structure, characteristics, regulatory issues, and tax considerations
  • Learning objectives include describing the features and structure of segregated funds, comparing advantages and disadvantages of Labor-Sponsored Venture Capital Corporations, defining closed-end funds, differentiating among income trusts, and describing advantages, disadvantages, and processes for investing in private equity
  • Content areas include segregated funds, Labor-Sponsored Venture Capital Corporations, closed-end funds, income trusts, and listed private equity
  • Key terms are defined in the glossary and are bolded within the chapter
  • Key terms include allocation, insurable interest, interval funds, irrevocable designation, and segregated funds, among others

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

CSC Volume 2 Chapter 10 PDF

More Like This

Managed Products Chapter Overview
30 questions
Private Equity and Segregated Funds Quiz
20 questions
Segregated Schools and Brown vs. Board
5 questions

Segregated Schools and Brown vs. Board

LargeCapacityForgetMeNot3487 avatar
LargeCapacityForgetMeNot3487
Use Quizgecko on...
Browser
Browser