Advanced Investing

Question 1

Prospectus

Answer 1

Required for publicly traded securities. gives a detailed disclosure of investment

Question 2

Exempt from prospectus

Answer 2

gics, segregtaed funds

Question 3

Exempt market products

Answer 3

private placements (small group of buyers, can be very risky)
land banking
ppn
mortgage investment corporations (more concentrated than mbs or mutual funds)
flow-through shares
hedge funds

Question 4

Prospectus exemption categories

Answer 4

accredited investor (200k income or 300k family, 1m investable or 5m total assets), offering memorandum (prospectus lite, for small companies), large investments (investor can write cheque for 150k or more), friends and family

Question 5

Exempt advantages and disadvantages

Answer 5

uncorrelated, tax efficiency (certain investments), unconventional (can use different strategies)
disadvantages - disclosure, regulations, risk, liquidity

Question 6

Flow through shares and LPs (for exploration)

Answer 6

can deduct investment up front (down to acb or close to it, if overpaid for units). can then claim capital gain when shares are sold in 2-3 years
-speculative

Question 7

Registrar.

Answer 7

The registrar is another third party who provides record keeping services to the fund.

Question 8

Trust vs Corp

Answer 8

Trust flows trhough to investors
Corp - investors are shareholders of corp. corp receives income and investors receive small taxable distributions (can defer most gains until disposition)

Question 9

Seg fund

Answer 9

75% *legislated minimum or 100% guarantee (usually 15 years or age 71) also covers death. death benefit is not tax free. investors can realize losses without disposing of fund shares. have creditor protection like insurance with parent, spouse child grandchild or irrevocable beneficiary

Question 10

High water mark

Answer 10

make over 4%, for example, to begin being compensated

Question 11

Wrap accounts

Answer 11

custom built mutual funds. regulation is more like stocks. service investor with specific needs

Question 12

Labour sponsored funds

Answer 12

meant to facilitate flow of capital to small businesses (must remain invested to 7 years or pay back tax credit). 15% credit on up to 5k per year. can be invested in rrsp and receive both deductions.

Question 13

closed end

Answer 13

could include etfs, pooled funds and wrapped accounts

Question 14

reits

Answer 14

uncorrelated, tax efficient (flow through) can pass on cca to investors. stable income