Exam CIFC Topic 1 Question 5 Discussion

Actual exam question for IFSE Institute's CIFC exam
Question #: 5
Topic #: 1

Which investor's needs would be BEST met with an income trust?

A. Tina wants a product that guarantees the return of at least 75% of her capital upon maturity of the contract or upon her death. B. Leanne wants a product that employs alternative strategies such as leverage and short selling to amplify returns. C. Gary wants to invest in a product which provides a consistent cash flow of interest, royalties, and lease payments passed along to unitholders. D. Phil wants to invest in a product where the performance is linked to that of an underlying asset and the issuer is obligated to repay his principal at maturity.

Suggested Answer: C Vote an answer

Explanation
An income trust is an investment trust that holds income-producing assets, such as debt instruments, royalty interests, or real properties. It can be structured as either a personal investment fund or a commercial trust with publicly traded closed-end fund shares. The main attraction of income trusts, in addition to certain tax preferences for some investors, is their stated goal of paying out consistent cash flows for investors, which is especially attractive when cash yields on bonds are low12 References = Canadian Investment Funds Course (CIFC) - Module 2: Investment Products - Section 2.3:
Income Trusts3 and web search results from search_web(query="income trust")12
3: https://www.ifse.ca/wp-content/uploads/2021/08/CIFC-Module-2.pdf

by Ken at Aug 24, 2024, 08:07 AM

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