Portfolio Managers in Mutual Funds

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What is the minimum purchase requirement for premium funds when making single lump-sum purchases according to the text?

$10,000

$5,000

$500 (correct)

$1,000

In regular investment plans, what is the minimum amount that additional contributions can often be made for?

$50

$25 (correct)

$100

$10

What is the frequency at which an investor can usually make contributions under a voluntary accumulation plan?

Quarterly

Weekly (correct)

Bi-weekly

Daily

What type of plans try to make contributing as easy as possible through preauthorized payments from bank accounts?

Voluntary Accumulation Plans Signup and view all the answers

What are acquisition charges deducted at the time of under voluntary accumulation plans commonly known as?

Pre-authorized Chequing (PAC) Plans Signup and view all the answers

What is the main difference between single lump-sum purchases and regular investment plans in terms of payment frequency?

Regular Investment Plans have more frequent payment options. Signup and view all the answers

When Julie calls the Dealing Representative, what time is it?

1:00pm Eastern Time Signup and view all the answers

How many units of the Delta Equity Mutual Fund can Julie purchase with $2,400?

200 units Signup and view all the answers

When must Julie have the funds available to pay for the units?

12:00 AM Thursday Signup and view all the answers

Why must funds be available before the transaction is processed?

To allow for cash flow planning Signup and view all the answers

Where are mutual funds available for purchase?

Through banks, investment dealers, fund companies, and other sources Signup and view all the answers

What should the fund prospectus and Fund Facts describe regarding purchasing mutual fund units?

How units can be purchased and how the fund is valued Signup and view all the answers

When is the purchase price for mutual funds determined?

After the purchase order is received Signup and view all the answers

What is the primary responsibility of a portfolio manager?

Generating the best rate of return for investors Signup and view all the answers

What role does the custodian play in relation to a mutual fund?

Keeping cash and securities safe Signup and view all the answers

How are portfolio managers guided in their decision-making process?

By the fund's investment objectives stated in the prospectus Signup and view all the answers

Why must custodial functions of a mutual fund be kept separate from those of the investment fund management company?

To protect investors' interests Signup and view all the answers

What is a key difference between a portfolio manager and a custodian in managing a mutual fund?

Portfolio managers make investment decisions, while custodians handle safekeeping of assets Signup and view all the answers

In what document is the name of the portfolio manager for a mutual fund disclosed?

Prospectus Signup and view all the answers

Which entity holds the income earned by a mutual fund until it is reinvested or distributed to investors?

Custodian Signup and view all the answers

What is the ultimate goal of all portfolio managers regarding a mutual fund's performance?

Generating the best rate of return for investors Signup and view all the answers

What percentage of the management expense ratio is typically represented by trailer fees for load paying equity funds?

40% Signup and view all the answers

Who are trailer fees designed to incentivize?

Dealing Representatives and mutual fund dealers Signup and view all the answers

What is the purpose of trailer fees in relation to mutual fund clients?

To encourage long-term client service by dealers and representatives Signup and view all the answers

Where do trailer fees come from within a mutual fund company?

From the management fees paid by investors Signup and view all the answers

How long can a dealer receive a trailer fee?

For as long as the investor holds units of the fund Signup and view all the answers

What is the basis for determining the size of a trailer fee?

The assets under administration by the dealer Signup and view all the answers

What is the main function of trailer fees for dealers and representatives?

To encourage them to provide ongoing service to clients Signup and view all the answers

What was the annual return in the first year for Raj's investment portfolio?

7.20% Signup and view all the answers

What was the year-end balance in the fourth year for Kiran's investment portfolio?

$9,865 Signup and view all the answers

Which investor was unable to withdraw $20,000 during the last year of their 5-year investment horizon?

Kiran Signup and view all the answers

What did the switch from Series T8 to Series T6 involve for an investor?

Reducing the annual payout rate from 8% to 6% Signup and view all the answers

What was the percentage change in the portfolio value from Year 2 to Year 3 for Raj?

+17.61% Signup and view all the answers

How did Raj's and Kiran's investment portfolios differ in terms of their ending balances after 5 years?

$11,114 for Raj and $0 for Kiran Signup and view all the answers

What did the negative returns in Kiran's first year of retirement result in?

Requiring an adjustment to the withdrawal amount in the final year Signup and view all the answers

Why was Raj able to withdraw $20,000 per year despite experiencing negative returns later on?

His negative returns occurred later in the investment horizon Signup and view all the answers

What type of pension plan is characterized by retirement benefits determined by a fixed formula usually based on salary and years of service?

Defined benefit pension plan Signup and view all the answers

Which party is responsible for funding the registered pension plan?

Employer Signup and view all the answers

What is a key advantage of registered pension plans in terms of tax treatment for investment earnings?

Investment earnings grow tax-free Signup and view all the answers

Which entity administers the Income Tax Act's registration requirements for registered pension plans in Canada?

Canada Revenue Agency Signup and view all the answers

What feature of registered pension plans ensures that employees cannot lose their pension benefits if they declare bankruptcy?

'Creditor-proof' benefits Signup and view all the answers

Which type of employer-sponsored plan is known for having retirement benefits that vary based on investment performance?

Defined contribution pension plan Signup and view all the answers

What role might unions play in the sponsorship of pension plans according to the text?

Administrative oversight Signup and view all the answers

How are retirement benefits from registered pension plans taxed when employees start to withdraw money?

'Taxable' Signup and view all the answers

What is a key focus in Lesson 3 of the Retirement unit?

Withdrawing from RRSPs Signup and view all the answers

Why is it important for a Dealing Representative to understand government and employer plans?

To create a sound investment strategy for clients Signup and view all the answers

What type of accounts are covered in Lesson 4 of the Retirement unit?

Locked-In Accounts Signup and view all the answers

In Lesson 2 of the Retirement unit, what is the main topic of discussion?

Registered Retirement Savings Plans (RRSPs) Signup and view all the answers

What aspect of retirement planning is most emphasized in the Retirement unit?

Private retirement savings plans Signup and view all the answers

What is a critical concept a Dealing Representative should grasp regarding retirement savings planning?

Being familiar with RRSP rules and contribution limits Signup and view all the answers

What is the primary goal of Lesson 1 in the Retirement unit?

Introducing government and employer plans Signup and view all the answers

What fundamental knowledge does Lesson 3 aim to impart in the Retirement unit?

Withdrawing funds from locked-in accounts Signup and view all the answers

If Miguel switches to investing in a Registered Retirement Savings Plan (RRSP) like Priscilla, what will be the impact on his tax obligations?

His tax obligations will increase due to additional tax implications of RRSP contributions. Signup and view all the answers

What aspect of Priscilla's investment strategy allows her to accumulate a greater amount over time compared to Miguel?

Compound growth resulting from reinvesting returns. Signup and view all the answers

How does Priscilla's investment strategy differ from Miguel's in terms of taxation during the investment period?

Priscilla defers taxes until withdrawal, while Miguel pays taxes annually. Signup and view all the answers

What effect does the compounding of investment growth have on Priscilla's overall returns?

Increases the total amount she can accumulate over time. Signup and view all the answers

Which factor contributes significantly to the difference in the final savings amount between Priscilla and Miguel?

The compounding effect of reinvesting returns in Priscilla's account. Signup and view all the answers

What is the primary advantage of Priscilla's Registered Retirement Savings Plan (RRSP) account compared to Miguel's non-registered account?

Tax-deferred growth without annual tax payments. Signup and view all the answers

If Miguel decides to switch to a Tax-Free Savings Account (TFSA) instead of an RRSP, what would likely happen to his long-term savings compared to investing in a non-registered account?

His long-term savings would increase due to the tax benefits of a TFSA. Signup and view all the answers

What significant advantage does Priscilla gain by contributing to an RRSP instead of a non-registered account?

$10,000 compounded annually due to tax-deferred growth. Signup and view all the answers

What is Sue's minimum RRIF withdrawal for the year if her RRIF assets had a market value of $200,000 and she was 85 years old?

$17,020 Signup and view all the answers

If an individual is 80 years old and has a $250,000 RRIF, what would be the minimum RRIF withdrawal amount?

$16,550 Signup and view all the answers

At what age do the Non-Qualified RRIF Factor and Qualified RRIF Factor values become equal?

85 Signup and view all the answers

In which type of annuity or RRIF do you have control over your investment options?

RRIF Signup and view all the answers

If a 73-year-old has a $180,000 RRIF, what is the minimum withdrawal amount?

$9,945 Signup and view all the answers

At what age does the Non-Qualified RRIF Factor reach its peak value?

95 Signup and view all the answers

What is the primary purpose of LRSPs and LIRAs compared to RRSPs?

Accepting transfers from RPP assets only Signup and view all the answers

What does vesting refer to in relation to a registered pension plan?

Employee's right to keep employer contributions and earnings Signup and view all the answers

What can an employee under the age of 55 do with pension benefits if they switch employers?

Move funds to a locked-in RRSP or LIRA Signup and view all the answers

What does the term 'vesting' specifically refer to in the context of pension plans?

Employee's right to keep employer contributions and growth Signup and view all the answers

What are the main limitations of LRSPs and LIRAs compared to RRSPs?

Restrictions on withdrawals before retirement age Signup and view all the answers

What is the significance of an employee's length of service regarding employer deposits?

Affecting the ability to transfer employer deposits Signup and view all the answers

What is a key feature that distinguishes LRSPs and LIRAs from RRSPs?

Sources of deposits limited to RPP assets transfers Signup and view all the answers

Why do LRSPs and LIRAs not allow regular contributions like RRSPs?

'Locked-in' nature due to source being RPP asset transfers Signup and view all the answers