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Foran Financial Institute Advancing Financial Careers since 1987 APRIL 7, 2013 BY FORANFINANCIAL
Mutual Funds (CIFC, IFC) Exam Questions Questions Chapter 3: Mutual Funds 1. A little less than three years ago Patricia bought $2,000 worth of Maple Leaf Resource Fund. T he fund has since performed poorly. S he feels she has been patient enough and wants to redeem all of her units. S he purchased the fund on a deferred sales charge basis. The DS C schedule starts with a 5% commission if the funds are redeemed in the first year which is reduced by 1% each year thereafter. If redeemed after the 5th year the commission is 0% . T he DS C fee is based upon the original NAV PS at the time of purchase. When Patricia bought the Maple Leaf Resource Fund, the NAVPS was $10 per share and is currently priced at $6.75 per share. How much will she receive? a) $1,290.00 b) $1,309.50 c) $1,350.00 d) $1,404.00 Chapter 6: Pensions, Registered Accounts and Other Investments 2. In 2012, John earned $45,000 as a computer technician. He received rental income of $7,000, rental expenses were $2,000. H e also received $6,000 in dividends from his Bell Canada preferred shares. John is a member of the companies defined contribution pension plan and contributes 5% of his salary which is matched by his employer? What is his eligible RRSP contribution room for 2013, assuming no carry-forward room. a) $4,860 b) $4,500 c) $5,580 d) $9,000 Answers 1. a) `$1,290.00 Redemption amount = NAVPS – back-end sales charge = $6.75 – (original NAVPS × sales charge %) = $6.75 – ($10 × 0.03) = $6.75 – $0.30 = $6.45 × 200 units* = $1,290 * she originally purchased 200 units ($2000 ÷ 10) 2. b) `$4,500 $45,000 Year 2013 salary + 5,000 Net rental income [ $7,000 – $2,000 ] = $50,000 Earned income for 2012 RRSP purposes × 18% = $9,000 John can contribute $9,000 or $22,970 whichever is less minus the pension adjustment (PA). Pension adjustment (PA) is contribution by employer + employee to the plan in the previous year (2012) $45,000 × (5% + 5%) = $4,500 PA $9,000 – $4,500 = $4,500 RRSP room for the year 2012 For more Mutual Funds questions check out our Mutual Funds Quiz Book (http://www.foranfinancial.com/products/mutual_funds.html). Keep up to date on our courses and products by liking us on Facebook (http://www.facebook.com/foranfinancial) and following our Twitter (https://twitter.com/ForanFinancial) Feed. This entry was posted in Exam Questions, MF Exams, Mutual Funds and tagged Bell Canada, Canadian Securities Institute, CIFC, CSI, exam questions, IFC, IFIC, MFexamquestions, Mutual fund, Mutual fund fees and expenses, Registered Retirement Savings Plan, RRSP. Bookmark the permalink. Powered by WordPress.com.