LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
A money market segregated fund invests in:
- AStocks of large, stable companies that pay regular dividends
- Short-term, high-quality debt such as treasury bills and commercial paper
- CReal estate and mortgages that generate steady rental income for the fund
- DLong-term government bonds, which pay the highest and most stable interest
Correct answer: B) Short-term, high-quality debt such as treasury bills and commercial paper
Money market funds are the lowest-risk category, suited to short horizons and parking cash. Returns track short-term interest rates.
Why the other options are wrong
- AEquities are held in separate funds.
- CReal estate is a specialty category.
- DLong bonds carry interest-rate risk and are not money market instruments.
Exam tip
Money market: short-term debt, stability, low return.
Common mistake
Treating a money market fund as guaranteed.
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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