Q - An initial lockup period seen in hedge funds is commonly:

 One to two years

 Four to six months

 Eight to twelve weeks

 Five years or more

Q - Which of the following attempt to profit by exploiting inefficiencies or differences in the

pricing of related securities.

 Relative value strategies

 Event-driven Strategies

 Directional Strategies

Q - A ______ strategy can have any number of long positions in the portfolio, but the net
exposure must be short.

 Equity market-neutral

 Merger or risk arbitrage

 Dedicated short bias

 Convertible arbitrage

Q - Absolute Risk is best described as:

 Long/Short movement

 Macro variability

 Total Variability/Volatility of returns

 Overall Uncertainty Returns

Q- A_____ strategy invests in the equity or debt securities of companies that are in financial
difficulty and facing bankruptcy or reorganization.

 Distressed securities

 Global Macro

 Long/short equity

 Merger, or risk arbitrage

Q - This is a strategy designed to identify and exploit mispricing between convertible securities
(i.e., convertible bonds or preferred shares) and the underlying stock.

 Convertible arbitrage

 Global macro

 Dedicated short bias

 Fixed income arbitrage

Q - Liquid alternatives have appeal to and may be suitable for investors who have the following
characteristics and investment priorities. Select all that apply.

 Have a good understanding of capital markets and investment strategies

 Have short- to medium-term liquidity needs

 Have a medium-term investment horizon

 Focused on fee savings

Q - Most alternative strategy fund returns are:

 not normally distributed

 normally distributed

 relatively distributed

 Completely predictable
Q - An alternative strategies that exhibits a higher-than-normal likelihood of experiencing both
negative returns and more extreme returns (both positive and negative) would exhibit...

 Positive skew and positive kurtosis

 Negative skew and negative kurtosis

 Negative skew and positive kurtosis

 Positive skew and negative kurtosis

Q - The following statement is an attribute of hedge funds. Choose whether the hedge fund
attribute will increase or decrease risk to an investor and/or their portfolio.

Hedge funds can have a low correlation to traditional asset classes and securities.

 Increase

 Decrease

Q - A High-water mark:

determines the risk that an investor will absorb

is a performance measurement for fund sponsors

sets a bar above which the manager earns new incentive fees

results in rebalancing decisions

Q - What is the minimum investment exemption amount for non-individual investors according
to National Instrument 45-106?

 $500,000

 $200,000

 $1,000,000

 $150,000
Q - Which type of investments have a Right of Withdrawal?

 Both ETFs and Mutual Funds

 Equities and ETFs

 Hedge and Mutual Funds

 Bonds and Mortgages

Q - If the reset value is higher than the net asset value of the fund at death, how is the 100%
death benefit offered by a segregated fund calculated?

 The difference between the net asset value of the fund at death and the original
investment.

 The difference between the reset value and the original investment.

 The value of the original investment.

 The difference between the reset value and the net asset value of the fund at death.

Q - The following statement is an attribute of hedge funds. Choose whether the hedge fund
attribute will increase or decrease risk to an investor and/or their portfolio.

Minimal regulations constrain the use of strategies, products or securities by the fund
manager(s).

 Decrease

 Increase

Q - What are the main reasons why investors would include alternative investments in their
portfolio? Select all that apply

 To add Alpha

 For diversification Benefits

 Fee Reduction
  To capture absolute return opportunities

Q - What is the most frequently used measure of investment risk for alternative investment
strategies?

 Uncertainty measured with beta

 Variability measured by delta

 Volatility measured by alpha

 Volatility measured by standard deviation

Q - The following statement is an attribute of hedge funds. Choose whether the hedge fund
attribute will increase or decrease risk to an investor and/or their portfolio.

Minimal regulations constrain the use of strategies, products or securities by the fund
manager(s).

 Decrease

 Increase

Q - The main disclosure document for a segregated fund is the...

 fund facts.

 information folder.

 simplified prospectus.

 annual information form.

Q - REITS & business trusts are examples of___

 MBSS

 none of the options are correct

 income trusts
  unit investments trusts

Q - As a generalization, and all else being equal, which of the following ranks fund types from
lowest to highest based on management fee?

 Segregated funds, Index funds, Equity mutual funds

 Equity mutual funds, Index funds, Segregated funds

 Index funds, Equity mutual funds, Segregated funds

 Segregated funds, Equity mutual funds, Index funds

Q - Compared to open-end funds, closed-end funds offer all of the following advantages to
investors except:

 Capital gains, dividends and interest distributions are paid directly to closed-end fund
investors.

 Closed-end funds are typically more fully invested than open-end funds.

 Closed-end funds are typically more fully diversified than open-end funds.

 Closed-end funds can be short-sold. Open-end funds cannot.

Q - Which of the following risks would apply to an MBS but not a mutual fund?

 Systemic risk

 Market risk

 Pre-payment risk

 Inflation rate risk

Q - An example of company that uses its capital to purchase the assets of an underlying
company, typically in the manufacturing, service, or retail industry, is called a:

 Private equity company

 Business Trust

 Broker
  Special Trust Vehicle

Q - Which of the following is a disadvantage of investing in a listed private equity firm?

 Large staff who can be consulted for all investment decisions

 lliquid investments

 Access to legitimate inside information

 Tax-free flow through status of earnings to shareholders

Q - Where does an investor purchase shares in a listed private equity company?

 Broker/Dealer network

 Over-the-counter

 Stock exchange

 Distributor

Q - The dividend on the common shares of a split share corporation is reduced by 40%.
Assuming the split preferred share has a guaranteed dividend, what action will be taken within
the corporation?

 Sell additional Split Preferred shares to pay the dividends.

 Sell some common shares held in the split share corporation to pay the dividends.

 Raise additional capital by issuing new shares of the Split hare Corporation to pay the
dividend.

 Sell additional Split Capital shares to pay the dividends.

Q - Which is not one of the tiers in a standard 3-tier tranche for an asset-backed security?

 mezzanine

 senior

 secured
  junior

Q - Identify the correct risk and return characteristics of a MBS.

1. Yields are lower than those of government bonds with similar terms.

2. MBS are typically more liquid than other structured products.

3. MBS are significantly more risky than T-bills.

4. Unlike bonds, MBS's have prepayment risk.

 3 and 4.

 2 and 3.

 1 and 3.

 2 and 4.

Q - A hybrid investment that combines the safety of a deposit instrument with the potential for
capital gains is a(n):

 index-linked GIC

 hedged investment certificate

 mortgaged backed security

 income trust

Q - Which of the following best describes "structured products"?

 A passive investment vehicle that is engineered to provide specific risk and return
characteristics

 A passive investment vehicle that is engineered to provide low risk and high return
characteristics
  An active investment vehicle that is engineered to provide low risk and high return
characteristics

 An active investment vehicle that is engineered to provide specific risk and return
characteristics

Q - Which investors in the split share structure expose themselves to "inherent leverage"?

 Preferred share investors, but only if they are buying the shares on margin.

 Preferred share investors.

 Capital share investors, but only if they are buying the shares on margin.

 Capital share investors.

Q - Ned owns DEF split shares that are nearing the end of their term. Upon expiry, the split
share company will redeem the shares. What can Ned expect to receive if he owns the capital
share component?

 The common share will be sold in the marketplace and split equally between the capital
shares and the preferred shares

 The common share will be sold. The preferred shareholders will receive their principal
back as well as other obligations owed, with the residual amount belonging to the
capital shareholder

 The common share will be sold in the marketplace with the proceeds divided according
to the cost of each component versus the common share value upon issue.

 Nothing; Ned's investment would be reallocated into another split share issue.

Q - An investor lives in a province where the provincial tax credit is the same as the federal tax
credit. If she invests $3,000 in a labour-sponsored venture capital corporation, her total tax
credit is closest to:

 $450

 $1,500
  $900

 $750

Q - What is the term used to refer to the time-period during which initial investments cannot be
redeemed from a hedge fund?

 Lockup period

 Accreditation period

 Deferral period

 Pre-redemption period

Q - ___measures the extent to which a distribution is tilted toward negative or positive returns.

 Treynor

 Sortino

 Skew

 Kurtosis

Q - An investor purchases a 5-year PPN linked to the average return on a basket of 5 common
shares, with a maximum return of 40% attributable to any one common share. The actual return
of each stock at the end of 5 years is as follows:

ABC 12%

CDE 37%

EFG 48%

GHI-11%

UK-4%

Calculate the effective average return.

 14.8%
  13.4%

 20.6%

 9.5%

Q - An investor with a lower risk tolerance, is highly credit-sensitive, and does not have high
return expectations is interested in purchasing an Asset Backed Security. Recommend a suitable
tranche to this client.

 Mezzanine.

 Junior.

 Securitized,

 Senior.

Q - Under this alternative strategy, the manager is not trying to eliminate market effects or
market trends completely rather, he or she takes both long and short positions simultaneously,
depending on the outlook of specific securities.

 Distressed securities

 Global Macro

 Merger, or risk arbitrage

 Long/short equity

Q - What are the four primary risks associated with PPNs as identified in the course?

 Liquidity, political, credit, currency

 Liquidity, performance, credit, currency

 Liquidity, inflation, interest rate, credit

 Inflation, performance, credit, interest rate

Q - The Sharpe Ratio of Hedge Fund ABC is .23, while the TSX Composite Index (it's relative
benchmark) has a Sharpe Ratio of 30. How would you describe Hedge Fund ABC's risk-adjusted
performance?

 Poor overall as it is not above 3

 Not enough information provided

 Under-performed its benchmark

 Out-performed its benchmark

Q - The strategies categorized as___seek to profit from unique corporate structure events.

 Directional

 Event driven

 Relative value

Q - Determining suitability of alternative strategies for clients is

 Very straightforward

 Typically not as straightforward as with traditional mutual funds

 Similar to that of Mutual Funds

 Streamlined with a questionnaire

Q - ____funds invest in equity and debt securities of companies in emerging markets. Such a
fund is not a strategy in itself, rather, the term refers to any number of hedge funds that invest
in the securities of emerging market nations.

 Distressed securities

 Emerging markets alternative funds

 Global Macro

 Long/short equity
Q – If the return on the ABC fund was normally distributed with an average monthly return of
0.98% and a standard deviation of 5.78%, we would expect to find that:

 95% of all returns lie within -6.7% and 10.2%

 68% of all returns lie within -5.78% and 6.76%

 99% of all returns lie within -11.56% and 11.56%

 68% of all returns lie within -4.8% and 6.76%

Q - A___ is designed to achieve returns that are multiples of the performance of the underlying
index it tracks.

 Leveraged ETF

 Managed futures strategy

 Equity market-neutral strategy

 Distressed securities strategy

Q - A self-employed professional died and left a non-registered investment portfolio of $250,000

$150,000 was held in segregated funds and $100,000 was in mutual funds. He had business
related debts of $300,000. His beneficiaries would receive...

 $150,000.

 $250,000.

 Nothing.

 $100,000.

Q - What is a major difference between an open end fund and closed end fund?

 Open end funds can be more fully invested than closed end funds

 Closed end funds trade on an exchange whereas open end funds do not
  Closed end funds are more liquid than open end funds because they trade on an
exchange.

 It is possible to short open ended funds but not closed end funds

Q - Which of the following statements about the risks associated with business trusts are you
most likely to agree with?

 They are subject to the same interest rate risk as fixed-income securities and are as
stable as the equity market.

 They are subject to the same interest rate risk as fixed-income securities and are less
stable than the equity market.

 They are subject to the same interest rate risk as fixed-income securities and are more
stable than the equity market.

 They are subject to less interest rate risk as fixed-income securities and are more stable
than the equity market

Q - Segregated fund investors own contracts that have a value represented by notional units
rather than fund units. Contract holders are therefore considered non- participating and thus
lack voting rights, unlike shareholders or unitholders.

 True

 False

Q - Historically, most closed-end funds have traded...

 at a discount to their NAV.

 at a premium to their NAV.

 at their NAV.

 It is not possible to generalize.

Q - What is a potential disadvantage of REIT investment?

 REITs do not provide income for investors - all growth is in the form of capital gains.

 REITs are not subject to full disclosure rules.

  REITs sometimes have thin trading volumes.

 REITs are not liquid investments compared to real estate.

Q - A closed end fund has:

 Only OTC stocks

 Some fixed and some variable number of shares

 A variable number of shares

 A fixed number of shares issued

Q - Which of the following strategies is the manager is only concerned with the yield curve of a
single issuer. This strategy is normally only implemented with a sovereign yield curve.

 Fixed-Income arbitrage

 Managed futures

 High-yield bonds

 Convertible arbitrage

Q - Jessica is a conservative investor. She requires income from Which type of structured
products is more suitable for her? her modest portfolio.

 PPN

 Split shares

 NHA MBS

 Listed private equity

Q - Which of the following is NOT an advantage of structured deposits?

 Professional management

 Higher potential yields than traditional deposits

  Guaranteed returns

 Economies of scale

Q - Identify the risk that the prepayment option on a MBS exposes a Canadian investor to?

 Liquidity.

 Currency

 Interest Rate.

 Reinvestment.

Q - Who is a front-end load on a mutual fund purchase payable to?

 Distributor

 Representative

 Custodian

 Transfer and Registrar

Q - Select the justification for trailer fees paid to a client's mutual fund sales representative.

 Reduces the overall fees paid by an investor.

 Encourages investors to stay in a fund.

 Compensates the representative for providing ongoing advice to the investor.

 Compensates the representative for initially selling the fund.

Q - Indicate the expenses that are not included in the Management Expense Ratio (MER)

 Custodial fees

 Management and operating fees

 Audit fees
  Trading costs

Q - An investor purchases $12,000 of a mutual fund with a 3.5% front-end load. Calculate the
actual amount invested.

 $9,600

 $12,420

 $10,960

 $11,580
Q - Prior to engaging in covered call ETF investing, an advisor should consider which of the
following:

 Management constraints

 All are true

 Payment scenarios

 Associated fees