LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
An index fund:
- AHolds a single stock chosen to represent the market as a whole
- Replicates a market index, offering market returns at lower cost
- CTries to beat the market by selecting the best stocks within the index
- DIs actively managed by a team that adjusts holdings as market conditions change
Correct answer: B) Replicates a market index, offering market returns at lower cost
Passive management lowers costs. Segregated index funds add insurance features to index exposure.
Why the other options are wrong
- AIt holds the index's constituents, not one stock.
- CIt matches, not beats, the index.
- DIt is passively managed.
Exam tip
Index fund: passive, market return, lower fees.
Common mistake
Expecting an index fund to outperform in downturns.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.