Canadian Investment Funds Course Exam (CIFC) Free Practice Test

Question 1

Reagan has accepted a role to be the Chief Revenue Officer of a charitable organization. She is currently registered as a Dealing Representative for Sunshine Financial Services.
Which of the following would apply to her?

A. Holding both positions at the same time is a violation of securities industry rules and regulations .

B. The dealer will closely monitor her sales activities to ensure any clients from the charity are not getting a discount on potential fees.

C. The regulator will limit her from providing financial services to anyone associated with the charity.

D. Reagan is not required to inform her dealer of this outside activity if none of her colleagues from the charity become clients.

Correct Answer: D

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Question 2

Yesterday, Mariana purchased mutual funds for the first time from Diablo, who is a Dealing Representative for Horizon Financial. When Mariana mentions to her friend Marcus that she just started to invest, Marcus confides that he experienced losses from mutual fund investing. Her initial feelings of excitement have now changed to worry and regret. She wished she had talked to her friend before investing and wonders if she can change her mind.
Which statement regarding the right of withdrawal applies?

A. The right of withdrawal is based on the securities act legislation within the jurisdiction the purchase occurred.

B. Before Mariana can cancel her order, she must wait two business days to pass before she can cancel her order.

C. The Canadian Securities Administrators have instituted national instruments regarding Mariana's right to cancel her order.

D. How the right of withdrawal can be applied is determined by the Mutual Fund Dealers Association of Canada's conduct rules.

Correct Answer: A

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Question 3

Karen's know your client (KYC) profile corresponds to someone who has a long time horizon, is comfortable with risk and volatility, and is primarily interested in growth. She watches the daily movements of the Toronto Stock Exchange (TSX) and wants a mutual fund that will closely match what she sees.
What kind of mutual fund would be BEST for her?

A. Canadian bond fund

B. Canadian equity index fund

C. Canadian small capitalization equity fund

D. Canadian dividend fund

Correct Answer: B

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Question 4

The portfolio manager of the High Income Fund has 90% of the mutual fund invested in bonds. What is a reason for holding bonds in a mutual fund portfolio?

A. Coupon payments paid by bonds from large Canadian corporations are eligible for preferential tax treatment.

B. Bonds provide regular interest income which can be flowed out directly to investors.

C. To increase the dividend yield and credit quality of the mutual fund

D. Bonds produce regular capital gain payments which result in preferential tax treatment for unitholders.

Correct Answer: B

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Question 5

Louis is the portfolio manager for Quattro Fund. The mandate of the mutual fund is to invest in a combination of cash, fixed income, and equity securities; however, Louis has the ability to adjust the portfolio according to market conditions. If Louis feels that interest rates will fall, he could invest the whole portfolio in equities. If he feels the market is too high, he could take profits and sit totally in cash. What type of mutual fund is Quattro Fund?

A. commodity pool

B. Canadian equity fund

C. balanced fund

D. asset allocation fund

Correct Answer: D

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Question 6

Loretta is looking for a well diversified equity fund. Her ideal mutual fund would hold investments within and outside Canada. Although she is seeking growth, Loretta also wants a mutual fund that invests in quality companies.
Which of the following mutual funds would be the best choice for Loretta?

A. Auric Precious Metals Fund - this sector fund invests in Canadian companies that participate in the precious metals sector such as owning mines in foreign countries.

B. Dominion International Growth Fund - this international equity fund invests in small and medium sized companies in countries all around the world.

C. Polar Global Blue Chip Equity Fund - this global equity fund invests in large, established companies in mostly stable and mature foreign markets.

D. Lennox Energy Fund - this sector fund invests primarily in Canadian oil and gas companies that sell both to domestic and foreign markets.

Correct Answer: C

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Question 7

On January 3, John invests $500 in the Blue Sky U.S. Equity Fund. On July 1 of the same year, he invests another $500 into the same mutual fund. Information about the net asset value per unit (NAVPU) at the time of each transaction is provided below. Given this information, what will be the value of John's investment on December 31 of this year (please ignore transaction costs and distributions)?

A. $1,198

B. $1,332

C. $1,216

D. $1,256

Correct Answer: D

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Question 8

If an investor was looking for an investment with a risk equal to that of the market, which factor would she want in an investment?

A. a standard deviation of 1

B. a beta of 0

C. a beta of 1

D. a standard deviation of 0

Correct Answer: C

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Question 9

You are meeting a potential client, William, for the first time. He is a high net worth individual and you are keen to get his business. Which of the following would you consider the most important to create an impressive first impression on your potential client?

A. tone of your voice

B. your body language

C. your words

D. volume of your voice

Correct Answer: B

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Question 10

You are meeting a new client, Steven, and you are trying to determine his level of understanding of different investments. Which question would give you the most information regarding your client's familiarity with investing?

A. What rate of return do you expect from investing?

B. Do you have the resources to invest for the long-term?

C. Do you want to minimize taxes from your investments?

D. Do you understand the relationship between risk and return?

Correct Answer: D

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IFSE Institute Canadian Investment Funds Course (CIFC) Free Practice Test