Question 1

Sheldon is a 25 year old graphic designer. He has just started working and saves regularly. Apart from his regular salary he also earns extra money from freelancing after office hours and during weekends. His earnings from his freelance work are sufficient for meeting his living expenses. He saves the entire amount of his salary. He has heard about lifecycle funds but has come to you for additional information.

Which of the following statement about lifecycle funds is TRUE?

A. As Sheldon gets older, the life cycle asset allocation changes from more risky to less risky.
B. All lifecycle funds start with equal allocations to cash, fixed income and equities before being re-balanced.
C. The asset allocation of a lifecycle fund is set based on the age demographic of its unitholders and remains the same for the time frame of the lifecycle fund.
D. Investor income is the only basis for changing the asset allocation of a lifecycle mutual fund.

Question 2

The Mutual Fund Dealers Association of Canada (MFDA) has strict rules concerning conflicts of interest. Which of the following is TRUE?

A. Gifts and benefits may be provided to a client if your employer is aware of the benefits and has given approval.
B. Activities that do not relate specifically to your employer need not be reported.
C. Only actual conflicts must be reported to your employer. Potential conflicts need not be reported because they have not happened yet.
D. Borrowing money from a client will always be acceptable provided there is a written contract detailing the nature of the agreement.

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