Jack and Jill hold a mutual fund account as tenants in common. What conditions would apply to their account?Should either die, full ownership of the account would pass to the otherEach would be the owner of 50% of the account's assetsEither could issue trading instructions on all account assetsEach would be required to provide KYC information
Answer(s): A
In a tenants in common account, each owner holds a pro-rata share (e.g., 50%) and can only issue instructions for their portion, with no right of survivorship. KYC information is required for both owners. The feedback from the document states:"If more than one person owns an account and it is not specifically identified as being a joint account, each owner owns a pro-rata share of the account, unless ownership is divided in another manner and noted on the account. Where an account is held as tenants in common, there is no right of survivorship and each owner, unless otherwise specified, can only give instructions with regard to the pro-rata portion of the account."
Chapter 17 Mutual Fund Dealer RegulationLearning Domain: Ethics, Compliance and Mutual Fund Regulations
A dealing representative explains the past performance of a mutual fund to a potential client, discussing the annual simple returns and compound returns that the fund had earned. She concluded by indicating she expects the fund's NAVPU was likely to rise at similar rates in the future, given the economic outlook. What unacceptable selling practice has occurred?
Answer(s): D
Promising that a mutual fund's NAVPU will increase by a certain amount is an illegal and unacceptable selling practice, as it implies guaranteed future performance. The feedback from the document states:"There are a number of sales practices that are clearly illegal or otherwise unacceptable to securities regulators. A dealing representative may not make promises that the NAVPS or NAVPU of a fund will achieve a certain level or increase by any amount."
Sofie is a busy mutual fund sales representative. She would like to move clients that are invested in low-yielding cash accounts to her firm's higher-yielding proprietary money market mutual fund. She confirms the orders with the clients, then instructs her new sales assistant, who will write the IFC exam next week, to enter orders to buy units in this fund. How has Sofie violated the standards of conduct?
Only registered individuals can process mutual fund orders. Allowing an unregistered sales assistant to enter orders violates the standards of conduct. The feedback from the document states:"Mutual fund sales representatives must be registered to sell mutual funds. This requires registration with the securities administrator in each province and territory in which the clients to whom they sell mutual funds reside."
What is the time period during which an individual must complete a training program once she starts acting as a dealing representative?
Answer(s): B
A mutual fund dealing representative must complete a training program within 90 days of starting to act in that role and be closely supervised for six months. The feedback from the document states:"All mutual fund dealing representatives are required to complete a training program within 90 days from the day that they first start acting as a dealing representative and must be closely supervised for six months."
A mutual fund sales representative is asked to make a presentation to an investment club. During the presentation, he discusses personal experiences of a questionable nature. What aspect of Professionalism is relevant to this situation?
Answer(s): C
Discussing questionable personal experiences in a public setting can harm the representative's professional image, relating to the aspect of other personal endeavors. The feedback from the document states:"The representative must take care to ensure that any publicly visible activity in which he participates is conducted responsibly and moderately so as not to present an unfavorable public image."
Chapter 18 Applying Ethical Standards to What You Have LearnedLearning Domain:Ethics, Compliance and Mutual Fund Regulations
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