Question

A client has the following accounts with an investment dealer who becomes insolvent: 0.5 million in a cash account,0.6 million in a margin account, 0.55 million in RRSP "A",0.65 million in RRSP "B", 0.75 million in trust for a daughter and0.45 million in trust for a grandson. What is the total amount of his coverage under CIPF?

1) 3.0 million.
2) 3.2 million.
3) 3.4 million.
4) 3.5 million.

Answer 1

The total CIPF coverage for the client with multiple accounts, including cash, margin, RRSPs, and trust accounts, would typically be $4 million, exceeding the options provided. Clarification on policy limits may be needed.

Step-by-step explanation:

The coverage under the Canadian Investor Protection Fund (CIPF) for a client having multiple accounts with an investment dealer that becomes insolvent would include different limits based on the types of accounts held by the client. Each separate account such as a cash account, margin account, Registered Retirement Savings Plan (RRSP), and trust accounts for dependents are usually covered individually up to a certain limit. Based on CIPF rules, the standard coverage limit is $1 million CAD for all general accounts combined (e.g., cash and margin accounts) and $1 million CAD for all registered accounts combined (e.g., multiple RRSP accounts).

Therefore, for the accounts listed, the coverage would be as follows:

• Cash and margin accounts combined: up to $1 million.
• Both RRSP accounts combined: up to $1 million.
• Trust for daughter: up to $1 million.
• Trust for grandson: up to $1 million.

Adding these together, the total coverage under CIPF would be $4 million. This exceeds any options listed, suggesting a need for clarification or understanding of the specific policy limits and rules of the CIPF coverage.