Pearson IFC New Attempt

The financial planning pyramid illustrates the risk-return spectrum of investments. For a very aggressive investor, high-risk securities like OTC securities are suitable. The feedback from the document states:

"As a visual aid, the planning pyramid helps you show clients how mutual funds fit into the investment universe. A very aggressive investor could consider investments such as OTC Securities."

The correct answer is C. Liquidity. According to the Investment Funds in Canada curriculum, the primary objectives of money market mutual funds are capital preservation and liquidity, with income as a secondary consideration. Money market funds invest in short-term, high-quality debt instruments such as treasury bills, bankers’ acceptances, and commercial paper, which mature in less than one year.

The CIFC text emphasizes that money market funds are designed to provide investors with easy access to cash, making liquidity their most important feature. These funds typically maintain a stable net asset value per unit (NAVPU), allowing investors to redeem units quickly with minimal price fluctuation.

Tax efficiency is not a defining feature of money market funds, as interest income is fully taxable in non-registered accounts. Money market funds also do not provide an inflation hedge because returns are generally modest and may not keep pace with rising prices. Yield is intentionally low relative to other asset classes because higher yields usually require higher risk, which contradicts the fund’s conservative mandate.

Because liquidity is the cornerstone of money market fund design and suitability, Option C is the correct and fully CIFC-verified answer.

 If Ellen receives the National Child Benefit Supplement (NCBS), Jeff may be eligible for the Canada Learning Bond (CLB). The CLB is a grant of up to $2,000 that the Government of Canada deposits into a child’s RESP to help low-income families start saving for their child’s education2. The CLB does not require any contributions from the parents. To be eligible for the CLB, the child must have been born after December 31, 2003 and the family must receive the NCBS, which is part of the Canada Child Benefit3. The other statements are false. If Jeff qualifies for additional CESG, his CESG lifetime maximum increases to $7,200, not $10,000. If Jeff decides not to pursue a post-secondary education, he cannot keep the CESG; it must be returned to the government. George may open an RESP for Jeff and it will qualify to receive CESGs, as long as George is a resident of Canada and has a valid social insurance number. References: Unit 8: Retirement, Canada Learning Bond, [Canada Education Savings Grant], [RESP Withdrawals], [RESP Providers]

The expected portfolio return is the weighted average of each fund’s return.

Investment in ABC Bank Canadian Equity = $350 ÷ $500 = 70%

Investment in ZYX Global Growth Fund = $150 ÷ $500 = 30%

Expected Return = (0.70 × 8%) + (0.30 × 9.8%)

= 5.6% + 2.94% = 8.54% ≈ 8.5%

Correct answer = 8.5%.