Why the other options are wrong:

• To qualify for additional tax deductions immediately.: The advisor explains the 20 percent grant benefit of RESP contributions, without describing an immediate tax deduction.
• To reduce the risk level of her investments.: The risk level of investments is discussed separately from the contribution amount.
• To make future withdrawals more flexible.: Withdrawal flexibility is a TFSA advantage, not the reason to increase RESP contributions.

Correct Answer: Money can be withdrawn for any purpose without tax.

Why this is correct: The advisor says a TFSA allows withdrawals at any time for any purpose, tax-free. This flexibility is the key advantage the provider describes. There are no restrictions on what the money can be used for.

Why the other options are wrong:

• It guarantees a fixed rate of return.: The advisor describes flexible tax-free withdrawals, without promising a fixed investment return.
• It must be used only for education costs.: The TFSA allows tax-free withdrawals for any purpose. Education-only use does not describe the TFSA.
• It provides extra government grants.: The education grant is described for the RESP. An extra government grant is not given as a TFSA benefit.

Correct Answer: They are not large enough to receive the full grant.

Why this is correct: The advisor says if the woman contributes $2,500 per year, she would get the full 20 percent grant of $500. Her current $1,500 only earns $300 in grants. Her contributions are not large enough to receive the maximum.

Why the other options are wrong:

• They exceed the annual limit for the government grant.: Her contributions do not exceed the limit. She is below the optimal amount.
• They are appropriate given her daughter's age.: The provider does not say her contributions are appropriate. the provider suggests increasing them.
• They should be redirected entirely into a TFSA.: The provider does not say she should move everything to a TFSA.

Correct Answer: Her daughter might not attend post-secondary school.

Why this is correct: The woman asks what happens if her daughter does not go to university. She worries about locking money into an RESP that may not be used for education. This is her specific concern about investing more.

Why the other options are wrong:

• Her income may be too high to qualify.: She does not mention her income level or qualification limits.
• The funds cannot be invested conservatively.: The advisor says conservative funds are available, so this is not a concern.
• She may exceed the annual contribution limit.: She does not worry about exceeding the annual limit. Her contributions are currently low.

Correct Answer: Balanced or conservative investments.

Why this is correct: The woman says she is a cautious investor and does not want big ups and downs. The advisor responds by suggesting balanced or conservative funds. This matches her preference for stability.

Why the other options are wrong:

• Short-term speculative trading.: She does not mention short-term speculative trading.
• Single-company stock investments.: She does not mention investing in single companies.
• Aggressive growth-focused funds.: She says she wants to avoid big swings, so aggressive growth is the opposite of her preference.

Correct Answer: Prepare contribution scenarios for the RESP.

Why this is correct: The advisor says the provider will prepare some options so they can go through the numbers together. The woman wants to adjust her RESP contributions, so the advisor will prepare different contribution scenarios for her to review.

Why the other options are wrong:

• Apply for additional government grants.: The provider does not say the provider will apply for additional government grants separately.
• Open a new TFSA immediately.: The provider does not say the provider will open a TFSA right away. the provider suggests prioritising the RESP first.
• Transfer funds into an RRSP.: The provider does not mention transferring funds into an RRSP as the immediate next step.