Canadian Securities Course (CSC) Level 2 Practice Exam

The correct statement is that in a mutual fund structure involving a corporation, holdings may diversify the portfolio and the earnings can come in different forms such as interest, dividends, or capital gains. This reflects the nature of corporate mutual funds, which are established as separate legal entities. They can invest in a wide array of assets, such as stocks and bonds, to achieve diversification.

Earnings generated from these investments can manifest as interest income, dividend payouts from equities, or capital gains realized when investments are sold for profit. This highlights the flexibility and benefits of a corporate structure in managing investments, which can lead to potentially higher returns for shareholders.

Regarding other statements, while trusts do operate under specific guidelines and may deal in units, they do not accurately describe a corporate structure. Similarly, although a trust deed outlines the objectives and policies of a trust fund, it does not pertain to mutual funds organized as corporations. The reference to shares being given usually in government doesn’t correctly characterize the nature of corporate mutual funds, which typically involve shares of the corporation itself, not specifically government-related assets.

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