Ch.13-mutual funds Practice
Questions All Answered Correctly.
· Investments that where insurance company is owner. Instead of funds facts segregated funds
have information folder
· Pays for asset allocation service.
· Seller qualification: licensed insurance agent instead of licensed mutual fund rep
· Protection against Assuris besides MFDA
· Maturity guarantee
o At least 75% amount invest.
· Age restriction
o No more than 80-year-old
· Reset dates.
o Minimum holding period for TEN years
o Renewable: TO PROTECT ACCRUED VALUES INSIDE THE FUND
§ You are not buying more of them!! - Answer Segregated funds:
reset dates, age restriction, maturity guarantee, protection (sro), seller qualification
o Death benefit
o Creditor protection
o Bypass probate - Answer seggregated funds include
Annuitant-who the contract is for
Beneficiary- who the contract goes to when person dies
Contract holder-buys the contract - Answer Annuitant
Beneficiary
Contract holder
verifying if will is real - Answer Probate:
, o Like a mutual fund but not constrained by rules (can do anything, short, derivatives)
-
sold without prospectus
o CANNOT SELL to RETAIL INVESTORS
o HAS to be min $150,000
o Sold with Memorandum instead of fund facts
o Target Sophisticated investors
o accredited investor: wealthy person whose net income $200,000 (or exceeded $300,000 if
combined with a spouse's income) - Answer Hedge funds:
o Correlation with traditional assest
o Absolute return (has a benchmark) - Answer Benefit:
o Lighter regulatory oversight
o Manager and market risk
o Complex investment strategies
o Low liquidity
o Business risk - Answer Risk:
o INCENTIVE fees are only paid on NEW profits
o (in a certain year, the highest income you have made previously. So in 4th year the highest
income we have made is 420 from year 2) incentive fees are only paid if higher than previous
high watermark. Cannot be EQUAL - Answer High watermark
minimum rate you have to achieve to get incentive) ex: if its 5% - Answer Hurdle rate
10+3=13%
Hurdle =4%
Rate of return=15%
Incentive=15%-4%=11%
Questions All Answered Correctly.
· Investments that where insurance company is owner. Instead of funds facts segregated funds
have information folder
· Pays for asset allocation service.
· Seller qualification: licensed insurance agent instead of licensed mutual fund rep
· Protection against Assuris besides MFDA
· Maturity guarantee
o At least 75% amount invest.
· Age restriction
o No more than 80-year-old
· Reset dates.
o Minimum holding period for TEN years
o Renewable: TO PROTECT ACCRUED VALUES INSIDE THE FUND
§ You are not buying more of them!! - Answer Segregated funds:
reset dates, age restriction, maturity guarantee, protection (sro), seller qualification
o Death benefit
o Creditor protection
o Bypass probate - Answer seggregated funds include
Annuitant-who the contract is for
Beneficiary- who the contract goes to when person dies
Contract holder-buys the contract - Answer Annuitant
Beneficiary
Contract holder
verifying if will is real - Answer Probate:
, o Like a mutual fund but not constrained by rules (can do anything, short, derivatives)
-
sold without prospectus
o CANNOT SELL to RETAIL INVESTORS
o HAS to be min $150,000
o Sold with Memorandum instead of fund facts
o Target Sophisticated investors
o accredited investor: wealthy person whose net income $200,000 (or exceeded $300,000 if
combined with a spouse's income) - Answer Hedge funds:
o Correlation with traditional assest
o Absolute return (has a benchmark) - Answer Benefit:
o Lighter regulatory oversight
o Manager and market risk
o Complex investment strategies
o Low liquidity
o Business risk - Answer Risk:
o INCENTIVE fees are only paid on NEW profits
o (in a certain year, the highest income you have made previously. So in 4th year the highest
income we have made is 420 from year 2) incentive fees are only paid if higher than previous
high watermark. Cannot be EQUAL - Answer High watermark
minimum rate you have to achieve to get incentive) ex: if its 5% - Answer Hurdle rate
10+3=13%
Hurdle =4%
Rate of return=15%
Incentive=15%-4%=11%
