LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
A balanced fund:
- Combines equities and fixed income in a managed mix for diversification and moderate risk
- BGuarantees that the client's balance will never fall below the amount deposited, whatever the markets do
- CHolds only cash and short-term instruments, balanced across several issuers
- DHolds only bonds, balanced between government and corporate issuers
Correct answer: A) Combines equities and fixed income in a managed mix for diversification and moderate risk
Balanced funds suit moderate profiles and hands-off clients. The manager sets the asset mix within stated ranges.
Why the other options are wrong
- BThe name refers to asset mix, not a guarantee.
- CCash is a minor component of a balanced fund.
- DBonds are one component alongside equities.
Exam tip
Balanced = equities + fixed income in one fund; moderate risk.
Common mistake
Assuming every balanced fund has the same mix.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
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