IFC Practice Questions

A.  

Redwood can flow the foreign dividends to unitholders, who can then take advantage of the dividend gross-up and tax credit mechanism.

B.  

Unitholders will receive $12.25 per unit of net capital gains from Redwood, of which only 50% is subject to tax.

C.  

Redwood can distribute the $2.00 per unit of capital losses to unitholders, who can then use them to offset their capital gains.

D.  

Since Redwood pays the tax on foreign income, it does not distribute dividend or capital gains income from foreign sources to unitholders.

A.  

Include investments paying capital gains in the registered plan and foreign pay investments in the non-registered plan.

B.  

Include domestic pay assets in the registered plan and foreign pay assets in the non-registered plan.

C.  

Include interest paying investments in the registered plan and dividend paying investments in the non-registered plan.

D.  

Include dividend paying investments in the registered plan and interest paying investments in the non-registered plan.

A.  

7.34%

B.  

6.75%

C.  

6.25%

D.  

6.21%

A.  

Investment objective

B.  

Shirley's risk profile.

C.  

Expected time horizon.

D.  

The tax consequences.

A.  

Market timing

B.  

Security analysis

C.  

Sector weighting

D.  

Asset allocation

A.  

Cametra asks to meet with her client, Pietro, to update his Know Your Client (KYC) information. They have not had a face-to-face meeting in years. Pietro feels updating the KYC information is unnecessary. He tells Cametra he is too busy and there is no reason for her to be concerned with the information she already has. Even though they fail to meet, Cametra continues to submit purchase orders at his request.

B.  

Gibson reviews two similar mutual funds for his client. One fund pays higher trailer fees than the other. Gibson discloses the difference between the trailer fees before recommending the fund that has higher trailer fees.

C.  

Keaira recommends a growth fund to her client, Shilo, but her Compliance Department questions the trade because Shilo's risk profile is too low. Rather than cancel the trade and absorb the market losses herself, Keaira recommends that Shilo keep the investment even though it is not in her best interest. Keaira updates Shilo's KYC to "high" risk and gets Shilo to sign the KYC update form.

D.  

Oscar wants to recommend a fund to his client which has a higher management expense ratio (MER) than other mutual funds. Since the MER could impact the client's decision, Oscar reports the conflict of interest to his dealer and discloses the conflict of interest to his client. Oscar explains how the higher MER is in the client's best interest because the overall cost for the client will still be less than a fee-for-service account holding m

A.  

$30.35

B.  

$25.00

C.  

$28.57

D.  

$14.29

A.  

typically monthly distributions of interest

B.  

if interest rates fall, the mutual fund's net asset value per unit (NAVPU) will decline

C.  

suitable only for high risk investors

D.  

risk-free where the mortgages are National Housing Act (NHA) insured

A.  

By the plan holder's income.

B.  

By the government.

C.  

By the date that the plan was opened.

D.  

By the plan holder's age.

A.  

They are contributors to a company's profits.

B.  

They are contributors to an investor's earnings.

C.  

They assist with the exchange of capital for a financial instrument.

D.  

By underwriting financial instruments, they raise capital for investors.