Question

Bilal Gupta has the following accounts with an investment dealer whose accounts are insured under CIPF:
• $1,250,000 Canadian dollar trading account • $500,000 US dollar trading account
• $750,000 Canadian dollar option account
• $250,000 RRSP account
The investment dealer declares bankruptcy. The market value of its accounts is $2 billion and the amount available for distribution is $1.8 billion. How much would Mr. Gupta receive from CIPF?
a $0
B $ 275,000

c $ 750,000

d $1,000,000

Answer 1

Option B - 275000

The market value of Investments of accounts of investment dealer	2 Billion	Working
Amount available for distribution	1.8 Billion
Percentage of Payments	90%	1.8/2
Unrecoverable Payments %	10%	100% - 90%

Particulars	Amount
Canadian Dollar Trading Account	$ 12,50,000
US Dollar Trading account	$    5,00,000
Canadian Dollar option Account	$    7,50,000
RRSP account	$    2,50,000
Total	$ 27,50,000

Particulars	Amount	Working
The amount that Mr. Gupta was unable to recover from the investment dealer	$    2,75,000	2750000*10%
Amount Paid by CIPF	$    2,75,000
* CIPF covers the losses only up to 1 million , Since the loss is less then 1 Million entire loss is covered by CIPF