Free Investment Funds in Canada (IFC) Exam Practice Questions

What is the characteristic of a Stage 2 – Family Commitment investor that most affects the ability to save for the long term?

In what circumstance would an investor receive a T3 or T5 reporting a capital gain from a mutual fund investment?

What amount of Canadian taxes would an investor with a 33% marginal tax rate pay on a $5,000 dividend payment from a foreign corporation?

Your client contacts you requesting that you purchase a mutual fund based on a “hot tip” from a friend who has been a successful investor. What bias is your client most likely being affected by?

Sudhir is interested in an investment where he can share corporation profits. Sudhir understands basic market mechanics and is willing to accept volatility; however, he does not consider himself a sophisticated investor. What type of underlying asset class should Sudhir consider?

Stanley, an investor, has the following four funds in his portfolio:

Fund — Strategy

MNO — High-yield bond

PQR — Canadian equities

STU — U.S. large-cap equities

VWX — International small-cap equities

Which fund is likely to have the highest management expense ratio?

The following data is available for an investment:

Purchase value

$125

End of the year value

$133

Quarterly dividend amount

$1

What is the annual return for this investment if held for one year?

Salvatore and Harriet recently got married. They are presently renting but are looking forward to buying a new home within 5 years. They both have separate savings established in their respective registered retirement savings plans (RRSPs) of $100,000 each. They have come to Dustin, a Dealing Representative, to open an additional joint investment account to increase their savings to assist with their future plans of buying a new home.

What does Dustin need to ensure about his recommendation?

What factor is irrelevant if an investor ' s primary objective focuses on generating capital gains?

David had $10,000 in his investment account with Dynamic Investments, a mutual funds dealer. On June 28, David wants to buy 500 units in ABC Canadian Dividend Fund that has a Net Asset Value Per Unit (NAVPU) of $14.10. His friend Robert suggests that he may get a better price if he used the strategy of dollar-cost averaging. David then instructs his Dealing Representative to place a purchase order for 100 units on the first of every month starting July 1st for the next 5 months.

The orders are executed at the following NAVPUs.

July 01, $14.00

Aug. 01, $14.50

Sep. 01, $15.00

Oct. 01, $14.25

Nov. 01, $16.50

Did David get a better purchase price following the dollar-cost averaging strategy compared to making a lump-sum purchase of 500 shares on Jun 28, 20xx?

An investor, whose marginal tax rate is 29% , owns non-registered units of a fund that have a beginning and ending NAVPS of $21.50 and $25.50 , respectively. The inflation rate is 2% . Assuming dividends are reinvested and ignoring additions or withdrawals, what is the before-tax, one-year rate of return ?

Lydia wants to transfer units of her Sussex Growth Fund to her registered retirement savings plan (RRSP) as her RRSP contribution. The current market value is $10,600 and the cost of the units is $4,500.

Which of the following statements is CORRECT?

Last year, the return on YXY fund was 10.5%. It reported a standard deviation and beta of 6.5% and 1.9, respectively. Over the same period, Treasury bills and 15-year government bonds yielded 2.2% and 4.3%, respectively. What is the fund ' s Sharpe ratio?

Which types of ratios include profitability and efficiency measures ?

What term refers to the minimum rate at which the Bank of Canada lends money on a short-term basis to chartered banks?