LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
A dividend or income equity fund emphasizes:
- ACash and short-term deposits that pay a steady rate of interest
- BSpeculative growth stocks that reinvest all profits rather than paying dividends to their shareholders
- CGovernment bonds, since their coupons provide the most reliable income
- Established dividend-paying companies, for income and moderate growth with favourable tax treatment
Correct answer: D) Established dividend-paying companies, for income and moderate growth with favourable tax treatment
Dividend funds suit income-oriented clients with some tolerance for equity risk. The dividend tax credit applies to eligible dividends allocated from non-registered seg funds.
Why the other options are wrong
- ACash is money market territory.
- BSpeculative stocks rarely pay dividends.
- CBonds are fixed income, not equity.
Exam tip
Dividend funds: income + growth; dividend tax credit non-registered.
Common mistake
Holding Canadian dividend funds inside a registered plan while interest sits non-registered.
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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