1.Based on the prospect for significant appreciation in the price of gold, Mae-Ling wants to invest 10% of her $1 million portfolio in a precious metals mutual fund. Reggie, a CERTIFIED FINANCIAL PLANNERprofessional, is Mae-Ling's financial planner and broker. He agrees that her risk tolerance and other factors would justify her investment in gold. Accordingly, Reggie convinces Mae-Ling to buy the Midas Touch Precious Metals Fund which is managed by a company with which Reggie has a lucrative referral arrangement. Reggie did not consider any other precious metals fund as a possible investment option for Mae-Ling. Among the funds Reggie could have recommended, are mutual funds that have lower management expense ratios, better returns over the long-term and management styles that are more in keeping with Mae-Ling's objectives relative to the Midas Touch Fund. What principles, as part of the CFP Code of Ethics, has Reggie violated?

1. Principle of Integrity
2. Principle of Objectivity
3. Principle of Professionalism
4. Principle of Competence
5. Principle of Diligence

a)1, 2, and 4

b)1, 3 and 5

c) 1, 2, 3, and 5

d) 2, 3, 4, and 5

2.In the midst of an economic slowdown, what change to the monetary policy or the fiscal policy wouldNOTstimulate the economy?

a)The Bank of Canada drops the overnight rate.

b)The Government increases spending.

c)The Bank of Canada sells treasury bills in the open market.

d)The Government decreases personal income tax rates.

3.Lorelai is interested in how profitable a company is in relation to her common share holdings. What ratio should Lorelai use in her analysis?

a)net profit margin

b)return on assets

c)earnings per common share

d)price-to-earnings ratio

4.Starting at age 65, Charlene would like to withdraw $25,000 from her non-registered investment portfolio to fund additional lifestyle expenses during retirement. Her annual withdrawals, which will be made at the beginning of each year, should factor in taxes and should keep pace with an inflation rate of 2.4%. If Charlene's combined marginal tax rate during retirement is 43%, she can earn a nominal rate of return of 7.8% on her non-registered savings and her life expectancy is age 90, how much will she need to accumulate by age 65 to meet her goal?

a)$488,198

b) $497,953

c)$601,571

d)$633,294

5.Gillian, aged 28, and Ralph, aged 30, are married. Gillian purchased a house 10 years ago however, upon meeting Ralph seven years ago, she sold her house and moved into the condominium Ralph rents. Ralph has never owned his own home.

Later this year, Gillian and Ralph want to purchase a house together. Also, in September of this year, Gillian is thinking about returning to school full-time for two years to finish the Master's degree. Gillian will claim the full-time education amount for at least three months this year as well as for at least three months in each of the next two years. If they intend to use their RRSPs to help with the home purchase and/or Gillian's education expenses, what statements are true?

1. Gillian cannot participate in both the Home Buyers' Plan (HBP) and the Lifelong Learning Plan (LLP) simultaneously.
2. Assuming Gillian makes a withdrawal under the LLP this year and she completes her Master's degree as scheduled, her first mandatory LLP repayment will be in five years.
3. Gillian and Ralph can each withdraw up to $25,000 from their respective RRSPs under the HBP to help purchase a new home.
4. Gillian and Ralph would be considered first-time home buyers for purposes of the HBP.

a)1 and 2

b)3 and 4

c)1 and 4

d)2 and 3

6.Anwar and Victoria, who have a combined gross annual income of $150,000, are purchasing a home. The property taxes on the new house will be $3,500 a year and the heating costs will be $180 a month. In addition, they have the following monthly expenses:

Monthly Expense Amount

Car loan payments$650

Personal line of credit$600

Childcare expenses$1,000

Telephone$120

Cable and Internet$95

If their mortgage lender uses a total debt service ratio of 40%, what is theMAXIMUMamount Anwar and Victoria can afford in monthly mortgage payments?

a)$2,063

b)$3,063

c)$3,278

d)$4,528

7.Arvinder received an after-tax bonus of $20,000 from his employer and he is considering the following options:

1. contributing the money to his RRSP and investing the funds in a 1-year GIC with an interest rate of 4.75%
2. applying the money to his credit card to reduce his current balance of $7,600the credit card carries an annual interest rate of 18.5%
3. investing the money in a non-registered, equity mutual fund for one year; he anticipates the fund will generate a return of 12% this year
4. applying the money to his $50,000 personal line of credit which carries an interest rate of 6.25%. Arvinder borrowed the money to invest in an 'R' Canada Savings Bond earning 8%.

Assuming Arvinder is in a 41.5% combined marginal tax bracket and basedSOLELYon tax-efficiency, rank his options from theMOSTprudent to theLEASTprudent.

a)2, 1, 3, and 4

b)4, 2, 3, and 1

c)2, 4, 1 and 3

d)2, 3, 1 and 4

8.Andre and Francine are married. Last year, Francine lent Andre $75,000. Francine drew up a formal loan agreement with Andre and charged him 5% interest (which matches the prescribed rate set by the Canada Revenue Agency). Andre makes interest-only payments to Francine on a monthly basis. Had Andre borrowed the funds from his bank, he would have been charged an interest rate of 7%. Andre used the money to invest in a business structured as a limited partnership; Andre is one of four limited partners. This year, his share of the partnership income will be $12,500.

Andre and Francine also have a 15-year old daughter named Sophie. Francine gave $15,000 to Sophie through an interest-free loan which Sophie used to invest in the preferred shares of Earthshine Inc.

What statement isFALSE?

a)Andre's partnership income is not attributable to Francine as they have established a loan for value.

b)Any capital gain or capital loss on the eventual disposition of Sophie's Earthshine shares will not be attributable to Francine.

c)Andre's partnership income is not attributable to Francine because it is considered active business income rather than property income.

d)Dividend income from Sophie's Earthshine shares is attributable to Francine as they have established a tainted loan.

9.Sheila purchased a $250,000, 365-day T-bill with a quoted yield of 4.55%. She sold the T-bill 180 days later, when interest rates were 3.85%. Based on thestreet method, what tax implications will Sheila incur due to the sale of her T-bill?

a)Sheila must report interest income of $5,244.51 and a capital gain of $850.40.

b) Sheila's taxable income will increase by $3,047.46.

c)Sheila must report interest income of $6,094.91.

d) Sheila will have interest income of $5,244.51 and an allowable capital loss of $425.20.

10.Wai Ming bought a $100,000 10-year, 7.45% semi-annual Government of Canada bond for $95,645. What is the effective yield to maturity of Wai Ming's bond?

a)7.45%

b)8.09%

c)8.26%

d)8.37%

QUESTIONS11 AND12 ARE BASED ON THE FOLLOWING INFORMATION:

11.Gertrude invested $50,000 in the Can't Miss Technology Fund at a time when the net asset value per share (NAVPS) was $16.45. The fund has a 2.25% front-end load. On December 24^th, the fund paid a capital gains distribution of $0.75 per share which Gertrude elected to reinvest in the Can't Miss Fund. Just prior to the distribution the NAVPS of the fund was $19.40.

What amount must Gertrude report as part of her total income on her income tax return as a result of the distribution?

a) $0

b)$1,114.08

c) $2,228.16

d)$2,279.64

12.What is the adjusted cost base per unit of Gertrude's investment following the distribution?

a) $16.83

b)$16.90

c)$17.06

d)$17.27

13.Audrey believes the share price of Body Electric Fitness Wear has peaked at its current price of $42 and will likely depreciate in the coming months. She purchases an October 40 put on Body Electric at a premium of $2.10. By September 12^th, the share price of the company has dropped to $29. What statement isFALSE?

a)Through her options transaction, Audrey has limited her loss to a maximum of $210.

b)On September 12^th, Audrey's options contract will be out-of-the-money.

c)If Audrey exercises her option, her proceeds of disposition for tax purposes will be $37.90 per share.

d)On September 12^th, Audrey's options contract will be in-the-money.

14.What statement about bonds isFALSE?

a)The duration of a bond is the weighted average time a bondholder must wait to receive the present value of his or her principal and all interest payments.

b)If two bonds have the same coupon but different terms, the bond with the shorter term will be more volatile.

c)Immunization is achieved by matching the duration of an investor's bond portfolio with the duration of his or her cash flow needs.

d)Convexity is the best measure of the volatility of a bond portfolio that has large changes in yield.

15.Gabriella wants insurance coverage on her life for the next 30 years to cover the dependency period of her 3-year old daughter, Agnes. Agnes is disabled so Gabriella wants a death benefit that will continue to offset the increasing medical costs Agnes may incur as time goes on. She wants a basic, maintenance-free insurance contractpaying premiums should be all that is required of her. What product willBESTaddress Gabriella's needs?

a)level term insurance

b)term-100 insurance

c)increasing term insurance

d)universal life insurance