IFC Practice Exam Questions and Answers

A.  

Compliance

B.  

Professional

C.  

Ethical

D.  

Legal

A.  

Canadian Securities Administrators (CSA)

B.  

Mutual Fund Dealers Association of Canada (MFDA)

C.  

Autorité de marchés financiers (AMF)

D.  

Chambre de la sécurité financière (CSF)

A.  

Clarence determines that the Absolute Alternative Fund is suitable for all of his clients. Clarence believes that all investors need alternative funds in order to be properly diversified.

B.  

Kiri recommends the Conservative Bond Fund to his client, Myrtle. The fund generates income and Myrtle's investment objective is "income" on her Know Your Client (KYC) form.

C.  

Li Ming recommends the Venturex Labour-Sponsored Fund to her client, Park. While Park has low tolerance and capacity for risk, Li Ming provides detailed disclosure which explains the fund's risks.

D.  

Roderik determines that the model portfolio he has developed will be suitable for all of his clients. Roderik has included investments with both income and growth to appeal to all investors.

A.  

Indicates how much an investment's performance fluctuates around its average historical return.

B.  

A standard deviation greater than one indicates a higher level of volatility than the market.

C.  

Measures the systematic risk of an investment relative to a benchmark index.

D.  

Standard deviation is also referred to as beta.

A.  

$115,000

B.  

$90,000

C.  

$105,000

D.  

$95,000

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.

A.  

Capital gains from mutual fund distributions are 100% taxable.

B.  

Capital gains distributions are not a disposition and are therefore not taxable.

C.  

Capital gains from mutual fund trusts are deferred until the investor exits the mutual fund.

D.  

Capital gains distributions from a mutual fund trust are reported annually on a T3.

A.  

consumers

B.  

departments and agencies of the Government of Canada

C.  

organizations in the private sector subject to federal regulation

D.  

departments and agencies of provincial governments

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.  

A net capital loss is passed on to the unit holders by the mutual fund in the year it occurs.

B.  

A net capital loss is permitted to be carried forward by the mutual fund for up to 3 years.

C.  

A net capital loss is permitted to be carried forward indefinitely by the mutual fund.

D.  

A net capital loss is permitted to be carried back indefinitely by the mutual fund.