1. In a portfolio, an unsuitable investment can have the effect of: Select a choice: a. Altering the suitability parameters of the entire portfolio b. Drawing the attention of regulators 2. 2.Suitability assessment obligations include a requirement to know and understand the characteristics and risks associated with any investment product ____________or ___________to clients. a. Approved; recommended. b. Bought: sold 3. 3.Insurance sales fact-finding is the collection of factual information about the clients________________assessment. a. Risk b. Needs 4. 4.For conventional mutual funds, a standardized risk classification methodology uses ____________________to determine investment risk. a. Standard deviation b. Predicted returns. 5. 5.Responsible investing can __________exposure to risks that may not be visible on a companys financial statements. a. Increase b. Reduce 6. 6.Of all financial products, only investments have a requirement of suitability for a client. a. True b. False 7. 7.Naming a beneficiary is essential in a life insurance contract to: a. Ensure the death benefit is paid. b. Ensure the wishes of the deceased are followed in regard to who or what receives the death benefit. 8. 8.It is suggested that one of the personal characteristics that could make a segregated fund a suitable investment is: a. A conservative investor who needs guarantees b. A young investor who has a long time horizon 9. 9.How does a life agent confirm suitability of a recommendation? a. By ensuring the applicant has the financial resources to pay premiums. b. By the statements appearing in the reasons why letter that address client characteristics. 10. 10.At its core, suitability is a: a. Legal requirement b. Ethical requirement 11. 11.One of the stipulations of the Client-Focussed Reforms is for more thorough documentation of your recommendations. How does documentation support suitability? a. It is fluid and always changes to reflect current circumstances b. A permanent record of reasons for decisions is created that can illustrate suitability was created at a specified time. 12. 12.Suitability rules do not apply to discretionary accounts. a. True b. False 13. 13.Robert, a conservative investor with a very low capacity for risk, has instructed his advisor, Ashley, to set up a margin account in which Robert plans to use leverage to acquire more shares of the high-tech start-up that his son has founded. Ashley can see Roberts emotions are trumping his logic. How can Ashley steer Robert to a suitable course of action? a. Rejects Roberts instructions and inform him that he must close his account with the firm because of the risk he is assuming. b. Advise Robert that his proposed plan is unsuitable based on KYC and ask if there have been material changes in his circumstances. She could also recommend an alternative course of action. 14. 14.Financial capacity will be an indicator of investor sophistication, and therefore suitable products. It is represented as a mix of: a. Skills, knowledge, judgment b. Net worth, age, time horizon 15. 15.Gilles is the attorney named in the power of attorney created by his cousin, Martin. Martin suffers a medical emergency in which any form of communication is impossible. Martins POA is activated and Gilles takes over Martins affairs on his request. He is alarmed to see that Martin is invested in some very high-risk funds and financial products based on the KYC Martin completed with you. As the advisor, which course of action is best for Martin? a. You accept Giles instructions to sell every high-risk investment in favor of GICs b. Suitability is based on Martins characteristics and objectives. Therefore, you do not accept Gilless instructions. 16. 16.A trusted contact person should be satisfied with the suitability of investments. a. True b. False 17. 17.Suitability results from an understanding of client characteristics and objectives with: a. Risk Tolerance b. Product knowledge 18. 18.What does risk capacity measure? a. Age, gender and net worth b. Income and net worth 19. 19.Leveraging is suitable for an investor who: a. Follows recommendations and advice b. Is not involved in the selection of investments and leaves decisions to others. 20. 20.A balanced fund is suitable for someone with a risk tolerance that can withstand: a. 50% growth b. 60% equity 21. 21.The three characteristics of financial goals are: a. Need, a date, a priority. b. Achievability, duration, success 22. 22.An important factor of financial goal-setting that may be overlooked is that it: a. Builds confidence. b. Has no relevance to suitability 23. 23.Suitability must be measured for: a. The account, the product(s), the use of any strategy b. The ability of the advisor to work with the client, client expectations, client needs. 24. 24.It has been suggested that a test for suitability applies: a. Based on the approximate portion of total client assets the advisor will be managing. b. To the clients intended use of invested funds. 25. 25.An account review should occur once every ___ months for a standard account, once every ___ months for a managed account, and once every ___ months for a discretionary account. a. 12, 3, 12 b. 36, 12, 12