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IFSE Institute CIFC Exam Overview:

Aspect Details
Exam Cost $300
Total Time 3 hours
Available Languages English, French
Passing Marks 60%
Exam Format Multiple Choice Questions
Exam Topics See breakdown below

IFSE Institute Canadian Investment Funds Course (CIFC) Exam Topics Breakdown

Content Area Percentage Description
Regulatory Environment 25% Understanding regulatory frameworks and compliance
Investment Fundamentals 40% Knowledge of investment products, markets, and strategies
Client Relationships 35% Handling client interactions, needs assessment, and communication

Frequently Asked Questions

IFSE Institute CIFC Sample Question Answers

Question # 1

Maxine is a portfolio manager who 15 years ago, purchased 100 shares of Never2Tacky, asocial media corporation for Aspirations Global Technology Fund. She purchased the stockwhen it was trading at $10. Last year, the peak market price was $120. Presently, it istrading at $99. News agencies are now reporting that additional regulations regardingsocial media companies are about to be agreed upon by G7 countries. Maxine isconcerned the market value of Never2Tacky is going to drop. She buys a put option with anexercise price of $95 with an expiry of 9 months.What type of strategy is Maxine using?

A. Speculating
B. Modern portfolio theory
C. Passively managing
D. Hedging

Question # 2

Bernadette has a high-paying job and is in the top tax bracket. She recently received apayment of $5 million upon the settlement of her uncle’s estate. Bernadette would like toinvest her inheritance in financial products that would not only grow her money but is alsoincome tax friendly. Which of the following would provide the most favourable tax treatment?

A. Dividends received from a large foreign corporation.
B. Coupon payments from Government of Canada bonds.
C. Capital gains from a large Canadian corporation.
D. Eligible dividends from a publicly-listed Canadian corporation

Question # 3

Quintin has been a Dealing Representative for Global Maximum Financial for 5 years.Today, he opened an account for his new client, Reginald. In addition to opening a newaccount, Reginald agreed toaccept Quintin's investment recommendation and placed a purchase order to buy units ofthe Global Maximum Value Equity fund.Quintin informed his Branch Manager Lupita about this new account on the same day thepurchase order was received. Lupita told Quintin that she would complete her review of theNew Client Application Form (NCAF) by no later than tomorrow.Which statement regarding this new account opening is CORRECT?

A. Quintin cannot accept purchase orders from a client until Lupita completes her review ofthe NCAF.
B. Lupita has two business days from the date of opening the new account to approve theNCAF completed by Quintin.
C. Quintin and Lupita are both following proper procedure regarding new account openingsand purchase orders.
D. Unless Quintin is presently under probation, he does not need Lupita's approvalregarding the NCAF.

Question # 4

With respect to the tax treatment of dividends received from a taxable Canadiancorporation, which of the following statements is CORRECT?

A. Dividends are taxed the same way interest income is taxed.
B. Dividends from both preferred and common shares of Canadian corporations receivepreferential tax treatment.
C. Dividends from non-resident corporations receive preferential tax treatment.
D. Only 50% of dividend income is subject to tax.

Question # 5

Megan purchases a treasury bill for $98,200. When it matures for $100,000, how doesMegan treat the $1,800 difference?

A. as interest income
B. as a capital gain
C. as a dividend
D. as return of capital

Question # 6

Your client, Kimberly has investments in both registered and non-registered plans. Whichof the following investment strategies is best suited for Kimberly from a tax perspective?

A. Include investments paying capital gains in the registered plan and foreign payinvestments in the non-registered plan.
B. Include domestic pay assets in the registered plan and foreign pay assets in the nonregisteredplan.
C. Include interest paying investments in the registered plan and dividend payinginvestments in the non-registered plan.
D. Include dividend paying investments in the registered plan and interest payinginvestments in the non-registered plan.

Question # 7

Saheed is a retiree who is considering splitting his pension income with his wife, Minu.Which of the following outcomes may occur if he shares his pension benefits?

A. Whether the couple saves on income tax will be dependent on Minu's marginal tax rate.
B. Minu will be exposed to a pension adjustment (PA) if she receives income from hispension.
C. This is a form of tax evasion and is therefore considered illegal based on income taxlegislation.
D. Regardless of how much income each person reports, the total amount of income taxeswill not change.

Question # 8

Malik has been saving money for retirement but he is worried about the impact inflationmay have on the value of his savings. He wants to purchase a bond that will give him asteady stream of income that is greater than the inflation rate. He has found a bond issuedby a major airline with a market price of $9,200, a par value of $10,000, and a coupon rateof 6.75%. What is the current yield of this bond?

A. 7.34%
B. 6.75%
C. 6.25%
D. 6.21%

Question # 9

Which of the following statements is TRUE about inflation?

A. Inflation results in a redistribution of income from borrowers to lenders.
B. Generally inflation will benefit those who are living on investment income.
C. Purchasing power rises as inflation rises.
D. An increase in the inflation rate could mean investors have less money to invest.

Question # 10

Which among the following BEST describes a company's retained earnings statement?

A. a company's financial position at a specific point in time
B. the amount of money contributed to the company by its shareholders or owners
C. the amount of profit that is reinvested in the company
D. the earnings and expenses of a business over a period of time

Question # 11

Which statement CORRECTLY describes index mutual funds and traditional exchangetradedfunds (ETFs)?

A. Index funds use an active investment management style, whereas ETFs use a passiveinvestment management style.
B. Both types of funds are closed-end investments that are required to hold the samesecurities as the index at all times.
C. The market price of an ETF must match its net asset value (NAV), whereas there can bediscrepancy in the pricing of index funds.
D. Both types of funds attempt to replicate the return of a specific market index, but theirreturns may not perfectly match the index.

Question # 12

Which of the following money market securities have the highest degree of risk for theinvestor?

A. Bankers' Acceptances
B. Commercial Paper
C. Treasury Bills
D. Municipal Short-Term Paper

Question # 13

Derek submits an order to sell 300 units of the Evergreen Canadian Mortgage Fund at 8:00p.m. EST on Friday, January 6. His proceeds will be based on the net asset value per unit(NAVPU) for which day (assume no holidays)?

A. Friday, January 6
B. Monday, January 9
C. Tuesday, January 10
D. Wednesday, January 11

Question # 14

Jabir recently joined Prosper Wealth Inc. and is looking forward to being a DealingRepresentative for the firm. Which of the following statements CORRECTLY describe whenJabir will be eligible to open newclient accounts and sell investments?

A. Upon registration application by the dealer
B. Upon employment with the dealer
C. Upon formal confirmation from the regulator
D. Upon passing the proficiency course

Question # 15

One of your clients, Rakesh, had a portfolio composed of 60% ABC Equity Fund and 40% ABC Bond Fund. Since equities were performing much better than fixed income, he hadincreased his holdings in ABC Equity Fund to 70% and had reduced his holding in ABCBond Fund to 30% of his portfolio.After benefitting the growth in his ABC Equity Fund for over 2 years, Rakesh isuncomfortable with this heavy exposure to equity funds and decides to rebalance hisportfolio back to 60% of ABC Equity Fund and 40% of ABC Bond Fund.He instructs you to switch 10% of the portfolio from the ABC Equity Fund to the ABC BondFund.Which of the following statements is CORRECT?

A. Rakesh will not be subjected to a switch fee if it is outlined in the prospectus.
B. Rakesh will not be subjected to a switch fee if his equity fund is a no-load fund.
C. Rakesh will not be subjected to a switch fee if his original units were purchased with a sales charge.
D. Rakesh will not be subjected to a switch fee if his equity fund is a low-load fund.

Question # 16

Yesterday, Mariana who is new to investing and purchased mutual funds for the very firsttime. She shared her excitement with her good friend, Julius. However, after Julius learnedabout her investment, he admits that he had a bad experience with mutual fund investingand that he lost money. Mariana regrets not talking to Julius prior to making her decision.Her feelings of enthusiasm have changed to fear. She is wondering if it is too late tochange her mind and cancel her purchase order.Which statement regarding the right of withdrawal is CORRECT?

A. The right of withdrawal for investors can be different depending on which province (orterritory) the fund was purchased within.
B. The Canadian Securities Administrators (CSA) created legislation that addresses theright of withdrawal for investors.
C. The Mutual Fund Dealers Association of Canada (MFDA) have written conduct rulesregarding the right of withdrawal.
D. Mariana has to wait two business after her purchase order has been settled to exercisethe right of withdrawal.

Question # 17

Jacinta is a Dealing Representative with WealthSource Partners Inc., a mutual fund dealerregistered in Ontario. Jacinta meets with her friend Saabir, who is a licensed insuranceagent. Saabir asks Jacinta fora list of Jacinta's clients so that Saabir can reach out to them to ensure that their insuranceneeds are being met. Which of the following statements about Jacinta sharing the list withSaabir is CORRECT?

A. If Saabir obtains prior consent from Jacinta to use the clients' personal information for areasonable purpose, Saabir can contact the clients to inquire about their insurance needs.
B. If Saabir promptly discloses that he has collected the clients' personal information fromJacinta without their consent, Saabir can use the information for a new stated purpose.
C. If Jacinta determines that there is a reasonable purpose for sharing the list with Saabir,she can disclose the information to Saabir without obtaining prior consent from the clients.
D. If Jacinta shares the list with Saabir without obtaining the clients' prior consent, she willbe in breach of the Personal Information Protection and Electronic Documents Act(PIPEDA).

Question # 18

Preston has been working for Thompson Industries for just over a year and has been partof Thompson's deferred profit sharing plan (DPSP) program from his start date. Prestonwants to know more aboutthese types of plans.What would you tell Preston about DPSPs?

A. The employer is obliged to make DPSP contributions for an amount equal to employeecontributions.
B. Once the plan is set up, the employer is obliged to make plan contributions each year.
C. DPSP contributions are tax-deductible to the employer.
D. Investment growth within the plan is taxable each year.

Question # 19

Patrick is a portfolio manager for the HyperTally Growth Fund. It has generated anannualized rate of return of 10% this past year. However, with the anticipation of very highinflation to soon occur, there is also an expectation of higher interest rates. Patrick isconcerned about the future returns of existing stocks within the fund. What may Patrick doto protect against the market value of the fund dropping?

A. Agree to buy forward contracts where he is in the "long' position.
B. Buy call options for the existing stocks stored within the fund.
C. Avoid the use of derivatives because they are speculative in nature.
D. Purchase put options for the fund's existing assets.

Question # 20

Pippa purchased a 15-year bond with a face value of $5,000 and a 7% coupon rate at thetime of issuance. The bond is due to mature later this year. The general interest rateclimate remained stable for the first 13 years of the bond's term. However, especially overthe past 18 months, both inflation and general interest rates have increased more thanexpected.What is Pippa likely to experience from her bond?

A. With the unanticipated rise in inflation, Pippa will benefit from a higher real rate of returnas well.
B. Due to inflation, Pippa will experience a capital loss once her bond reaches maturity.
C. The return of investment capital will have lower purchasing power than prior to investing.
D. With capital appreciation at 7% annually, Pippa's capital gain will be reduced by inflationat maturity.

Question # 21

Sean purchases 500 units of Penn Canadian Equity Fund when the net asset value per unit(NAVPU) is $16.70. On December 15, the mutual fund’s NAVPU is $21. On December 16,the mutual fund declares a distribution of $1.25 per unit. Sean’s distribution is immediately reinvested and he purchases additional units of the mutual fund.Which of the following statements about the effect of the distribution is correct?

A. After the distribution. Sean will have J&625 in cash and JB8.350 worth of the PennCanadian Equity Fund.
B. The total value of Sean's mutual fund holdings after the distribution and reinvestment is§9,875.
C. The NAVPU of the mutual fund does not change after the distribution since Seanreinvests his distribution and purchases additional units.
D. Sean's distribution is reinvested at a NAVPU of $19.75 and he receives approximately31.65 additional units.

Question # 22

Danica is looking for a mutual fund to hold in her non-registered account that provides aregular stream of income with potential for capital growth. She is having difficultydistinguishing between bond funds and dividend funds. Which of the following statementsis TRUE?

A. The return of dividend funds relies only on interest rates; whereas with bond funds, thereturn also depends on the general direction of stock markets.
B. When interest rates rise, the net asset value per unit (NAVPU) of bond funds decreases;whereas with dividend funds it rises.
C. Bond funds receive fixed interest payments from most of their investments.
D. Bond fund distributions receive more favorable tax treatment than that of dividend funds.

Question # 23

Danny is a Dealing Representative for Everbright Investments. He met with his clientAdele, who has $1,000,000 to invest. During their meeting Danny determines that Adelehas a high-risk profile. In addition, he learns that she has an excellent understanding ofequities and how volatile they can be. Danny is considering recommending growth fundsspecifically, and making a recommendation from the following investment options: Based on the information provided, which mutual fund should Danny recommend?

A. ABC Global Equity Fund.
B. DEF European Equity Fund.
C. LMN Asia Pacific Equity Fund.
D. Invest equally in all 3 funds.

Question # 24

The Mutual Fund Dealers Association of Canada (MFDA) has strict rules concerningconflicts of interest. Which of the following is TRUE?

A. Gifts and benefits may be provided to a client if your employer is aware of the benefitsand has given approval.
B. Activities that do not relate specifically to your employer need not be reported.
C. Only actual conflicts must be reported to your employer. Potential conflicts need not bereported because they have not happened yet.
D. Borrowing money from a client will always be acceptable provided there is a writtencontract detailing the nature of the agreement.

Question # 25

Gershon is a Dealing Representative and he opens a new account for his client, Isaac.Gershon collects the necessary information from Isaac in order to designate the TrustedContact Person (TCP) for Isaac’s account. Which of the following statements about Isaac’sTCP is CORRECT?

A. The TCP is an alternative to a Power of Attorney (PQA) and has the authority to makechanges to Isaac's account and direct trading.
B. The TCP is an alternative authority on Isaac's account that has the power to place atemporary hold on Isaac's account to disallow trading.
C. The TCP is the person whom Gershon can speak to if he becomes concerned aboutIsaac's mental capacity to make financial decisions.
D. The TCP is the person who is designated with authority to direct financial dealings forIsaac's account and make financial decisions.

Question # 26

Which of the following best describes implied needs of your clients?

A. They are needs reflected by statements made by clients regarding problems anddissatisfactions.
B. They are statements made by you showing readiness to solve a client's problem.
C. They are statements made by clients expressing the desire for lower commissions.
D. They are statements of wants and needs made by clients.

Question # 27

What information can be found from a simplified prospectus instead of Fund Facts?

A. Costs associated with mutual fund investing.
B. A summary of the top 10 investment holdings.
C. The investment strategies that are being used or proposed to be used.
D. Investor rights regarding cancelling an order.

Question # 28

Sylvia decided to use the savings from her bank account to purchase a 5-year bond. Theface value of the bond is $10,000, the market price is $9,230 and the coupon rate is 7%.What is the current yield on the bond? Round to 2 decimal places.

A. 7.00%
B. 7.25%
C. 7.58%
D. 7.75%

Question # 29

Russell is a Dealing Representative with Wealth Quest Strategies Ltd., a mutual funddealer and member of the Mutual Fund Dealers Association of Canada (MFDA). Russell isdeveloping his website toinclude sales content on a Target Date Fund. Which of the following is Russell permitted toinclude on his website about the Target Date Fund?i. the asset mix through the life of the fund until the future dateii. the expected decline in the fund's risk level as the fund reaches its target dateiii. the guaranteed return that the client will receive on the future dateiv. a graphic illustration of the fund's promised growth on target date

A. i and ii
B. i and iii
C. ii and iv
D. iii and iv

Question # 30

Which of the following statements about your mutual fund registration is CORRECT?

A. You can sell mutual funds anywhere in Canada as long as you are registered with oneof the provincial or territorial securities commissions.
B. Your online application must be reviewed and approved by your mutual fund dealerbefore you can begin to sell mutual funds.
C. You must renew your registration through the online NRD system every two years.
D. You must inform the regulatory authorities of any material or significant changes to yourpersonal circumstances.

Question # 31

Bernadette has a high-paying job and is in the top tax bracket. She recently received apayment of $5 million upon the settlement of her uncle's estate. Bernadette would like to invest her inheritance in financial products that would not only grow her money but is alsoincome tax friendly.Which of the following would provide the most favourable tax treatment?

A. Coupon payments from Government of Canada bonds.
B. Dividends received from a large foreign corporation.
C. Capital gains from stock investments.
D. Dividends from a large public Canadian corporation.

Question # 32

Sven owns preferred shares that give him the option to sell his holdings back to the issuingcompany at a predetermined price and within a specified time. What type of preferredshares does Sven own?

A. retractable
B. participating
C. convertible
D. redeemable

Question # 33

Xian-Li believes she is a sophisticated investor. She has constructed her own portfolio andhas had some success. She does not believe in studying a company’s details such asearnings, expenses, or assets. She is more concerned with patterns in a company’s stockprice over time. She believes patterns form and can be used to predict future movements inthe market.How does Xian-Li evaluate the companies in her portfolio?

A. fundamental analysis
B. flowchart analysis
C. technical analysis
D. value analysis

Question # 34

Charlotte has received proceeds from a deceased family member’s estate. Charlottedecides to visit Malik, who’s a Dealing Representative at her bank. She tells Malik, shedoes not know much about trading ETFs, but she wants to invest in ETFs. Charlotte saysshe feels fortunate to have this money and that she’s not worried about losing it becauseshe never planned on having any of it.What element of the Know Your Client (KYC) information has Malik been able to learn?

A. Risk Profile
B. Risk Capacity
C. Risk Preference
D. Risk Tolerance

Question # 35

Which of the following statements about global equity funds is TRUE?

A. They may invest in all countries including the investment fund manager's home country.
B. They must invest almost exclusively outside of the Americas.
C. They are always less risky than Canadian equity funds.
D. They specialize in one or two countries.

Question # 36

You have been researching Canadian equity mutual funds for a new client. You comeacross the following information. What can you conclude from this information?

A. Chamberlain Equity Fund has lower volatility since its 5-year annualized return is higher.
B. Fontaine Equity Fund is a better fund because it has a higher quartile ranking.
C. Fontaine Equity Fund has a lower risk level since its Sharpe Ratio is lower.
D. Fontaine Equity Fund's higher MER contributes to its lower 5-year annualized return.

Question # 37

You have been researching Canadian equity mutual funds for a new client. You comeacross the following information. What can you conclude from this information?

A. Chamberlain Equity Fund has lower volatility since its 5-year annualized return is higher.
B. Fontaine Equity Fund is a better fund because it has a higher quartile ranking.
C. Fontaine Equity Fund has a lower risk level since its Sharpe Ratio is lower.
D. Fontaine Equity Fund's higher MER contributes to its lower 5-year annualized return.

Question # 38

Which of the following is a rationale for a portfolio manager to use a passive portfoliomanagement strategy?

A. The manager does not believe in using benchmarks.
B. The manager wishes to create capital gains in the mutual fund by frequently buying andselling stocks
C. The manager believes he or she can outperform the market with his or her stock pickingskills.
D. The manager believes that as the markets are fairly priced, it would be futile to look formis-priced securities.

Question # 39

Daisy is a Dealing Representative registered in the province of Saskatchewan only. Daisy’sclient, Orville, a resident of Lloydminster, Saskatchewan is a retiree who presently has a$1,000,000 with her dealer, Easy Ride Financial. Orville is now planning to move toVegreville, Alberta next month. Easy Ride Financial is registered in Alberta andSaskatchewan. Neither Easy Ride Financial nor Daisy have any clients who are resident inAlberta.Which of the following should Daisy do if she wants to continue to service Orville’s account?

A. Request approval from the Mutual Fund Dealers Association of Canada to be eligible tobe a registered Dealing Representative in Alberta
B. Daisy could seek permission from her dealer to request a client mobility exemption withthe Alberta Securities Commission.
C. Daisy will need to forfeit her registration in Saskatchewan if she wants to be registeredin Alberta to keep Orville as a client.
D. Register with a different mutual fund dealer that is registered in Alberta so she can keepOrville as a client.

Question # 40

What is the role of a custodian?

A. to ensure safekeeping of all the securities in the portfolio
B. to oversee the general administration of the mutual fund
C. to construct and manage the portfolio of investments
D. to calculate the daily net asset value per unit (NAVPU) of the mutual fund

Question # 41

What is the role of a custodian?

A. to ensure safekeeping of all the securities in the portfolio
B. to oversee the general administration of the mutual fund
C. to construct and manage the portfolio of investments
D. to calculate the daily net asset value per unit (NAVPU) of the mutual fund

Question # 42

Josephine is a Dealing Representative with Sunshine Mutual Funds Inc. for over 10 years.Her brother Jonathan has an account with Sunshine Mutual Funds Inc., too. Jonathanwants Josephine to manage hisportfolio and make investment decisions on his behalf. Jonathan trusts his sister to makebetter investment choices than he can. He also wants to give Power of Attorney (POA) toJosephine so she can have full authority over his account.How can Josephine respond to her brother's request?

A. Josephine can accept a limited POA.
B. Josephine cannot accept the POA as she is not the immediate family.
C. Josephine can accept the POA as it is an exception that is permitted under the MFDArules.
D. Josephine should accept the POA after making a full disclosure to her dealer about thePOA.

Question # 43

Josephine is a Dealing Representative with Sunshine Mutual Funds Inc. for over 10 years.Her brother Jonathan has an account with Sunshine Mutual Funds Inc., too. Jonathanwants Josephine to manage hisportfolio and make investment decisions on his behalf. Jonathan trusts his sister to makebetter investment choices than he can. He also wants to give Power of Attorney (POA) toJosephine so she can have full authority over his account.How can Josephine respond to her brother's request?

A. Josephine can accept a limited POA.
B. Josephine cannot accept the POA as she is not the immediate family.
C. Josephine can accept the POA as it is an exception that is permitted under the MFDArules.
D. Josephine should accept the POA after making a full disclosure to her dealer about thePOA.

Question # 44

Your client, Cosmo, recently inherited $50,000 from his uncle. He wants to use this moneytowards his retirement savings. Cosmo is a 50-year old, self-employed carpenter and heearns on average $65,000per year. He has a registered retirement savings plan (RRSP) with the bank worth$425,000 and a tax-free savings account (TFSA) worth $46,000. He started saving whenhe was 25 years old and has alwaysmade his own investment decisions. His money is mostly invested in balanced funds. Hefeels most comfortable with these types of mutual funds since they offer potentialinvestment growth but without being too aggressive. Cosmo has no other assets.What additional information do you need about Cosmo to fulfill your know your clientobligation?

A. time horizon
B. income and net worth
C. risk tolerance
D. investment objectives

Question # 45

Lydia wants to transfer units of her Sussex Growth Fund to her registered retirementsavings plan (RRSP) as her RRSP contribution. The current market value is $10,600 andthe cost of the units is $4,500.Which of the following statements is CORRECT?

A. Lydia is only permitted to contribute cash to her RRSP not units of her mutual fund.
B. Lydia's RRSP contribution will be valued at $4,500.
C. Lydia's RRSP contribution will be valued at $10,600.
D. Lydia will incur a capital gain of $4,500 from the contribution.