Under the CP Code, which detail must be provided to an intermediary about a new investment product?

• A. Projected return over five years.
• B. Nature and extent of risks inherent in the product.
• C. Projected return, net of charges, over five years.
• D. The name of the senior executive in the product producer.

Answer: (B)

The main idea being tested is risk disclosure to an intermediary. Under the CP Code, the product producer must give the intermediary clear information about the risks inherent in the new investment product. This isn’t about promises of returns or who is in charge at the product house; it’s about ensuring the intermediary understands what could go wrong, how severe the risks could be, and how those risks relate to the product’s structure. With a solid picture of the risk profile—the kinds of risk (market, credit, liquidity, etc.) and the potential magnitude or likelihood—the intermediary can assess whether recommending the product fits a client’s risk tolerance and investment goals, and communicate those risks to clients appropriately.

Return projections or charges details, while sometimes relevant in other contexts, aren’t the disclosure focus required here, and naming a senior executive isn’t the information the CP Code mandates for this purpose.