Humber College

Canadian Securities II- BMFS 206-005

Assignment 2

NAME: _____________________________________________________

1. Mary bought a segregated for $400,000 in 2004. Her husband is the sole beneficiary of
the plan. In 2013, Mary passed away from a terrible disease. Answer the following
questions. Show all calculations and/or explanations (15 Marks).

a) If at the time of death, the value of the plan dropped to $200,000, what is the
death benefit payout?

b) If at the time of death, the value of the plan increased to $500,000, what is the
death benefit payout?

c) If at the time of death, the value of the plan dropped to $250,000, what is the total
amount that Mary’s husband will get?

2. What does each of the following acronyms stands for? (9 marks)

LSVCC
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NAVPS
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ACB
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3. Indicate whether the following is true or false (8 marks)

1) Mutual funds are sold through a simplified prospectus. ------------------
2) ETFs have maturity dates. ------------------
3) A Fund Manager can short sell in a mutual fund. ------------------
4) The MFDA regulates the distribution of mutual funds. ------------------
4. William bought $10,000 of ABC mutual fund. He sold it for $15,000 after 3 years
during which time he received $3000 in re-invested dividends. If William is in 40% tax
bracket, how much taxes will he pay? Show three steps in your calculations: Adjusted
cost base, capital gains and taxes. (20 marks).

5. John bought a Segregated Fund and insured Mary, but he designated Ruth to receive
the insurance proceeds. According the contract, what is the role of each person?
(8 marks)
Mary ________________________________
Ruth________ _________________________

6. Define the following terms (10 marks)

High Water Mark:

________________________________________________________________________

_______________________________________________________________________

Hurdle Rate:

________________________________________________________________________

7. List 3 investor exemptions for hedge funds.

Advantages: (15 marks)

_______________________________________________________________________
_______________________________________________________________________
_____________________________________________________________________

8. List and briefly describe the 3 main Alternative Investment Strategies. (15 marks)

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