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IFC Practice Questions

Investment Funds in Canada (IFC) Exam

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Total Questions : 486

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Question # 101

What bias would influence an investor’s decision to continue to hold an unprofitable investment despite little likelihood of an improvement in the investment’s value?

Options:

A.  

Representativeness

B.  

Loss aversion

C.  

Status quo

D.  

Cognitive dissonance

Discussion 0
Question # 102

David is reviewing a simplified prospectus and is particularly interested in one of the funds. The investment objective stated for this fund is to provide dividend income, capital preservation, and some potential for capital gains. What fund is David interested in?

Options:

A.  

Mortgage fund

B.  

Preferred dividend fund

C.  

Equity growth fund

D.  

Bond fund

Discussion 0
Question # 103

An increase in which factor may cause interest rates to decrease?

Options:

A.  

Default risk

B.  

Business activity

C.  

Capital supply

D.  

Inflation rate

Discussion 0
Question # 104

Which among the following plans includes a provision that places a maximum limit on the amount that can be withdrawn during a calendar year?

Options:

A.  

Life Income Fund (LIF)

B.  

Registered Retirement Savings Plan (RRSP)

C.  

Registered Retirement Income Fund (RRIF)

D.  

Deferred Profit Sharing Plan (DPSP)

Discussion 0
Question # 105

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?

Options:

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.

Discussion 0
Question # 106

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

Options:

A.  

The return of dividend funds relies only on interest rates; whereas with bond funds, the return 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.

Discussion 0
Question # 107

How can specialty mutual funds mitigate some of the risks associated with the product?

Options:

A.  

Reduce risk by holding securities with high market betas

B.  

Increase diversification by holding securities with low correlation

C.  

Increase returns through derivative market strategies

D.  

Reduce volatility by investing in fewer sectors

Discussion 0
Question # 108

When comparing mutual funds, what information would help a Dealing Representative determine a suitable mutual fund for a client?

Options:

A.  

Comparing historical rates of return between different types of mutual funds.

B.  

Assessing historical differences in the rate of return per unit of risk of similar mutual funds.

C.  

Referencing the fund code for each mutual fund that is being compared.

D.  

The rights a client has if there is a desire to cancel the purchased mutual fund.

Discussion 0
Question # 109

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. Jonathan wants Josephine to manage his

portfolio and make investment decisions on his behalf. Jonathan trusts his sister to make better investment choices than he can. He also wants to give Power of Attorney (POA) to Josephine so she can have full authority over his account.

How can Josephine respond to her brother's request?

Options:

A.  

Josephine can accept a limited PO

A.  

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 MFDA rules.

D.  

Josephine should accept the POA after making a full disclosure to her dealer about the PO

A.  

Discussion 0
Question # 110

Your client, Rinaldo, wants to know more about the fees associated with his mutual funds. What can you tell him about a mutual fund’s management expense ratio (MER)?

Options:

A.  

Mutual funds are required to calculate the MER on a daily basis.

B.  

Trailer and brokerage fees are charged separately from the MER.

C.  

The MER reflects the percentage of each dollar of fund assets that is used to pay for management services.

D.  

Mutual fund performance is not impacted by the MER since rates of return are published net of fees.

Discussion 0
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