UPDATED [2024] Pass IFSE Institute CIFC Exam in First Attempt Guaranteed [Q29-Q50]

UPDATED [2024] Pass IFSE Institute CIFC Exam in First Attempt Guaranteed

Pass CIFC Exam Latest Practice Questions

NEW QUESTION # 29
Which among the following BEST describes a company's income statement?

• A. It shows the amount of capital contributed to the company by its shareholders or owners.
• B. It provides a snapshot of a company's financial position at a specific point in time
• C. It shows the earnings and expenses of a business over a period of time.
• D. It shows the amount of profit that is reinvested in the company in the form of retained earnings.

Answer: C

Explanation:
Explanation
An income statement is a financial report that shows the earnings and expenses of a business over a period of time, such as a month, a quarter, or a year. It also shows the net income or net loss of the business, which is the difference between the total revenues and the total expenses. An income statement helps investors and creditors evaluate the profitability, performance, and risk of a business. The other options are not accurate descriptions of an income statement. Option A describes retained earnings, which are part of the equity section of the balance sheet. Option B describes contributed capital, which is also part of the equity section of the balance sheet. Option D describes the balance sheet, which is another financial statement that shows the assets, liabilities, and equity of a business at a specific point in time. References: Income Statement - Definition, Explanation and Examples, Income Statement: How to Read and Use It - Investopedia, How to Prepare an Income Statement | HBS Online

NEW QUESTION # 30
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 beta of 1
• B. a beta of 0
• C. a standard deviation of 0
• D. a standard deviation of 1

Answer: A

Explanation:
Explanation
Beta is a measure of the systematic risk of an investment, which is the risk that is related to the movements of the market as a whole. Beta compares the volatility of an investment to the volatility of the market. A beta of 1 means that the investment has the same level of risk as the market, and it tends to move in the same direction and magnitude as the market. A beta of 0 means that the investment has no correlation with the market, and it is unaffected by market fluctuations. A beta greater than 1 means that the investment is more risky than the market, and it tends to amplify the market movements. A beta less than 1 means that the investment is less risky than the market, and it tends to dampen the market movements. Therefore, if an investor was looking for an investment with a risk equal to that of the market, she would want a beta of 1. References:
Canadian Investment Funds Course (CIFC) Study Guide, Chapter 4: Mutual Funds, Section 4.5: Risk and Return of Mutual Funds, page 4-231 Beta Definition - Investopedia2

NEW QUESTION # 31
Lucas is 60 years old and continues to work. He presently is a plan holder of a registered retirement savings plan (RRSP). He is considering changing his RRSP to a registered retirement income fund (RRIF).
Which of the following statements is CORRECT?

• A. There is no minimum age to be an annuitant to a RRIF.
• B. Once he changes his RRSP to a RRIF, his unused total RRSP contribution room is lost.
• C. Investments that qualify as an eligible investment for a RRIF are different than for an RRSP.
• D. Minimal withdrawals are required to start in the current calendar year his RRIF was established.

Answer: B

Explanation:
Explanation
A registered retirement income fund (RRIF) is a type of registered plan that provides a stream of income in retirement. A RRIF can be created by converting an RRSP, but once the conversion is done, the plan holder can no longer make contributions to the RRSP or the RRIF. Therefore, any unused RRSP contribution room is lost after the conversion. The other statements are incorrect because:
A: There is a minimum age to be an annuitant to a RRIF, which is 71 years old. However, a plan holder can convert an RRSP to a RRIF at any age before 71.
C: Minimum withdrawals are required to start in the year following the year the RRIF was established, not in the current calendar year.
D: Investments that qualify as an eligible investment for a RRIF are the same as for an RRSP, such as mutual funds, stocks, bonds, GICs, etc. References:
Canadian Investment Funds Course (CIFC) Study Guide, Chapter 6: Registered Plans, Section 6.2:
Registered Retirement Income Fund (RRIF), page 6-81
Registered Retirement Income Fund (RRIF) - Canada.ca2

NEW QUESTION # 32
With respect to the tax treatment of dividends received from a taxable Canadian corporation, which of the following statements is CORRECT?

• A. Dividends from non-resident corporations receive preferential tax treatment.
• B. Only 50% of dividend income is subject to tax.
• C. Dividends are taxed the same way interest income is taxed.
• D. Dividends from both preferred and common shares of Canadian corporations receive preferential tax treatment.

Answer: D

Explanation:
Explanation
Dividends from both preferred and common shares of Canadian corporations receive preferential tax treatment because they are eligible for the dividend tax credit. This credit reduces the amount of tax payable on dividend income by accounting for the tax that the corporation has already paid on its earnings. Dividends from non-resident corporations do not qualify for this credit and are taxed at the same rate as interest income. Only
50% of capital gains, not dividend income, are subject to tax. References: The Dividend Tax Rate in Canada:
What You Need to Know Now - Hardbacon, How are Dividends Taxed in Canada? Exploring the Canadian Dividend Tax Credit

NEW QUESTION # 33
Which of the followings describes segregated funds?

• A. Segregated funds flow through capital losses to investors because the investors are the owners of the underlying fund.
• B. Segregated funds have high returns, high management fees, and cannot be redeemed until the maturity date of the contract.
• C. Segregated funds offer some protection of the capital invested but there is an added cost for the protection.
• D. Segregated funds are subject to securities regulation because they are distributed by mutual fund dealing representatives.

Answer: C

Explanation:
Explanation
Segregated funds offer some protection of the capital invested but there is an added cost for the protection.
Segregated funds are contracts issued by life insurance companies that invest in underlying funds, similar to mutual funds. Segregated funds have a maturity guarantee and a death benefit guarantee, which ensure that the investor or their beneficiary will receive a certain percentage of their initial investment, regardless of market fluctuations. However, these guarantees come at a cost, which is reflected in higher management fees and insurance fees than mutual funds. Segregated funds do not have high returns, as they depend on the performance of the underlying funds. Segregated funds can be redeemed before the maturity date of the contract, but they may be subject to early redemption fees or market value adjustments. Segregated funds do not flow through capital losses to investors, as they are not considered owners of the underlying fund.
Segregated funds are subject to insurance regulation, not securities regulation, because they are distributed by life insurance agents. References: Segregated Funds

NEW QUESTION # 34
The owners of Underground Airways Ltd. want to take their privately owned corporation public through an initial public offering (IPO). They are speaking to a specialist from an investment dealer to determine whether it would be advisable to become listed on a stock exchange or the over-the-counter (OTC) market.
In comparing the two options, which of the following considerations is TRUE?

• A. Underground would be subject to less stringent listing requirements if they chose the stock exchange as compared to the OTC market.
• B. Underground would still be directly involved in the trading of their shares on either market.
• C. If Underground chose to list on the OTC market, there would be no secondary market available for investors.
• D. A stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market.

Answer: D

Explanation:
Explanation
According to the Canadian Investment Funds Course, a stock exchange is a centralized and regulated market where securities of listed companies are traded between buyers and sellers. A stock exchange has strict listing requirements that companies must meet in order to be eligible for trading on the exchange. These requirements may include minimum capitalization, number of shareholders, financial reporting, corporate governance, and compliance with securities laws. A stock exchange also provides liquidity, transparency, and efficiency for the trading of securities.
An over-the-counter (OTC) market is a decentralized and unregulated market where securities that are not listed on a stock exchange are traded between dealers and brokers. An OTC market has no physical location, rather the trading is done through phone, email, or computer networks. An OTC market has lower listing requirements than a stock exchange, which makes it easier for smaller or newer companies to access capital.
However, an OTC market also has less liquidity, transparency, and efficiency than a stock exchange.
Therefore, if Underground Airways Ltd. wants to take their privately owned corporation public through an initial public offering (IPO), they would have to weigh the pros and cons of listing on a stock exchange or the OTC market. One of the main considerations is that a stock exchange listing would provide them with greater market exposure and public confidence than listing on the OTC market. This is because a stock exchange listing signals that the company has met the high standards of the exchange and is subject to ongoing regulation and oversight. A stock exchange listing also attracts more investors, analysts, and media attention than an OTC listing. A stock exchange listing may also increase the value and liquidity of the company's shares.
References: 1: Canadian Investment Funds Course - IFSE Institute 2 (Unit 5: Equity Securities)

NEW QUESTION # 35
Which of the following statement about Exchange Traded Funds (ETFs) is TRUE?

• A. All ETFs are actively managed.
• B. ETFs have lower MERs compared to mutual funds.
• C. Usually the market price of an ETF is the net asset value per unit (NAVPU) of the Fund on that day.
• D. Investors may sell their ETFs in the stock market or redeem them through the Fund at the NAVPU of the day.

Answer: B

NEW QUESTION # 36
The owners of Underground Airways Ltd. want to take their privately owned corporation public through an initial public offering (IPO). They are speaking to a specialist from an investment dealer to determine whether it would be advisable to become listed on a stock exchange or the over-the-counter (OTC) market.
In comparing the two options, which of the following considerations is TRUE?

• A. Underground would be subject to less stringent listing requirements if they chose the stock exchange as compared to the OTC market.
• B. Underground would still be directly involved in the trading of their shares on either market.
• C. If Underground chose to list on the OTC market, there would be no secondary market available for investors.
• D. A stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market.

Answer: D

Explanation:
Explanation
A is correct because a stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market. A stock exchange is a regulated and organized market where securities are traded through intermediaries such as brokers. A stock exchange listing can enhance the reputation, visibility, and liquidity of a company's shares, as well as attract more investors and analysts. An OTC market is a decentralized and less regulated market where securities are traded directly between buyers and sellers, usually through dealers or market makers. An OTC listing may have lower costs and fewer requirements than a stock exchange listing, but it also has less transparency, liquidity, and investor protection.
Underground would not be directly involved in the trading of their shares on either market (B), as they would only issue new shares through an IPO and then let the secondary market determine the price and volume of their shares. Underground would be subject to more stringent listing requirements if they chose the stock exchange as compared to the OTC market , as they would have to meet higher standards of financial reporting, disclosure, governance, and compliance. If Underground chose to list on the OTC market, there would still be a secondary market available for investors (D), but it would be less liquid and efficient than a stock exchange. References: Investment Funds in Canada (IFC) | Canadian Securities Institute

NEW QUESTION # 37
Catarina is a Dealing Representative for Ethical Financial which represents 20 different mutual fund families.
Darlene is a fund manager from one of those mutual fund families and wants to send a gift card to Catarina as a symbol of appreciation. Ethical Financial's policies and procedures manual (PPM) require that Catarina decline the gift.
What method of addressing conflict of interest is being used by Ethical Financial?

• A. Avoidance
• B. Potential
• C. Control
• D. Disclosure

Answer: A

Explanation:
Explanation
Avoidance is a method of addressing conflict of interest by preventing it from occurring in the first place.
Ethical Financial's policies and procedures manual (PPM) require that Catarina decline the gift from Darlene, which is a potential source of conflict of interest. By doing so, Catarina avoids any appearance of favouritism or bias towards Darlene's mutual fund family. (Canadian Investment Funds Course, Chapter 2, Section 2.3) References:
* Canadian Investment Funds Course, Chapter 2, Section 2.3: Conflicts of Interest
* IFSE Institute: Conflicts of Interest1

NEW QUESTION # 38
Portia is a Dealing Representative with Highview Wealth Inc., a mutual fund dealer. Portia recommends the Stature Growth Fund to her client Clive. Which of the following CORRECTLY describes what Portia must do in order to satisfy her obligations under the Client Relationship Model (CRM) and Client Focused Reforms (CFR)?

• A. Portia must mark the trade as ^unsolicited" if Clive wants to proceed with the trade and it is not suitable for him.
• B. Portia must provide Clive with the pre-trade disclosure to address any material conflicts of interest with the trade.
• C. Portia must calculate the net asset value per unit (NAVPU) and report it to Give in the trade confirmation.
• D. Portia must disclose the costs, expenses, and ongoing fees associated with the investment prior to the trade.

Answer: D

Explanation:
Explanation
The Client Relationship Model (CRM) and Client Focused Reforms (CFR) are regulatory initiatives that aim to enhance the relationship between registered firms and their clients by imposing higher standards of conduct and disclosure. One of the obligations under CRM and CFR is to provide clients with information about the costs, expenses, and ongoing fees associated with an investment prior to executing a trade. This includes disclosing the management expense ratio (MER), sales charges, deferred sales charges (DSC), switch fees, short-term trading fees, and trailer fees of a mutual fund. This information helps clients understand the impact of fees on their returns and compare different investment options. Therefore, option C is correct regarding what Portia must do in order to satisfy her obligations under CRM and CFR. The other options are not correct.
Option A is false because Portia does not need to calculate the net asset value per unit (NAVPU) and report it to Clive in the trade confirmation; rather, the NAVPU is determined by the mutual fund manager and reported by the mutual fund dealer in the trade confirmation. Option B is false because Portia must not mark the trade as unsolicited if Clive wants to proceed with the trade and it is not suitable for him; rather, Portia must act in Clive's best interest and advise him against making an unsuitable trade or decline to execute it. Option D is false because Portia does not need to provide Clive with the pre-trade disclosure to address any material conflicts of interest with the trade; rather, Portia must disclose any material conflicts of interest with the client relationship as part of the relationship disclosure information (RDI) that is provided at account opening and updated as necessary. References: [Client Relationship Model - Phase 2 (CRM2) | GetSmarterAboutMoney.ca], [Client Focused Reforms | GetSmarterAboutMoney.ca], [Client Focused Reforms - FAQs | IFIC]

NEW QUESTION # 39
Your employer has a contributory group RRSP under which he matches employee contributions, up to a maximum of 5% of salary.
Which of the following statements about a group registered retirement savings plan (RRSP) is CORRECT?

• A. If you leave your employer, your group RRSP stays with the employer.
• B. The employer chooses the plan provider.
• C. It is more costly and time consuming to administer than traditional pension plans.
• D. You need to wait until you file your taxes to receive your contribution tax deduction.

Answer: B

Explanation:
Explanation
A group RRSP is a retirement savings plan sponsored by an employer that allows employees to contribute through regular payroll deductions and benefit from tax advantages and possible employer matching. The employer is responsible for choosing the plan provider, which is the financial institution that administers the group RRSP and offers a range of investment options for the employees to choose from. The employer may also negotiate lower fees and better services with the plan provider than what individual RRSPs can offer.
Therefore, statement D is correct.
The other statements are incorrect for the following reasons:
* Statement A: A group RRSP is less costly and time consuming to administer than traditional pension plans, as it does not require actuarial valuations, funding requirements, or regulatory filings.
* Statement B: If you leave your employer, your group RRSP does not stay with the employer. You can transfer your group RRSP to an individual RRSP or another registered plan without tax consequences, as long as there are no locked-in provisions.
* Statement C: You do not need to wait until you file your taxes to receive your contribution tax
* deduction. Your contributions are deducted from your gross income before tax is calculated, so you receive an immediate tax benefit on your paycheque.
References: Canadian Investment Funds Course, Unit 9, Section 9.1

NEW QUESTION # 40
At 4:00 p.m. Eastern Time on July 6, the following information is collected for the Marigold Canadian Dividend Fund:

What is the net asset value per unit NAVPU for the Marigold Canadian Dividend Fund for July 6?

• A. $7.19
• B. $9.27
• C. $7.65
• D. $8.25

Answer: D

Explanation:
Explanation
This is the net asset value per unit (NAVPU) for the Marigold Canadian Dividend Fund for July 6. The NAVPU is calculated by dividing the net asset value (NAV) of the fund by the number of units outstanding. In this case, the NAVPU is $8.25 ($45,668,900 / 5,564,443).
The NAV is the value of a fund's assets minus the value of its liabilities. The value of assets is the value of all the securities in the portfolio, plus any cash and cash equivalents, plus any accrued income for the day. The value of liabilities is the value of all short-term and long-term liabilities, plus any accrued expenses for the day. The NAV is usually expressed on a per-share or per-unit basis, which is the NAVPU.
The NAVPU is the price at which investors can buy or sell units of the fund. It is determined at the end of each trading day based on the closing market prices of the portfolio's securities. The NAVPU can change daily depending on the performance of the securities in the fund and the fund's expenses.

NEW QUESTION # 41
What type of shares offer its shareholders the opportunity to receive additional dividends if the company's profit exceeds a stated level?

• A. Participating preferred shares
• B. Redeemable preferred shares
• C. Convertible preferred shares
• D. Cumulative preferred shares

Answer: A

Explanation:
Explanation
Participating preferred shares are a type of preferred shares that offer its shareholders the opportunity to receive additional dividends if the company's profit exceeds a stated level. These dividends are paid in addition to the fixed dividends that are normally paid to preferred shareholders. Participating preferred shares allow shareholders to benefit from both fixed and variable income streams, depending on the company's performance. References: Participating Preferred Stock Definition - Investopedia, Preferred Shares Explained | TD Direct Investing

NEW QUESTION # 42
Ellen and her only son Jeff live on the family farm with her father George. Jeff is five years old and Ellen has decided that it is time to start saving for Jeff's post-secondary education. She has called you to ask about registered education savings plans (RESPs).
Which of the following statements is TRUE?

• A. If Jeff decides not to pursue a post-secondary education, he can keep all the CESG but it then becomes taxable.
• B. If Ellen receives the National Child Benefit Supplement (NCBS), Jeff may be eligible for the Canada Learning Bond
• C. George may open an RESP for Jeff but it will not quality to receive Canada Savings Education Grants (CESGs).
• D. If Jeff qualifies for additional CESG. his CESG lifetime maximum increases to $10,000.

Answer: B

NEW QUESTION # 43
At the close of business, Great Lengths Equity Fund had total assets of $135 million and total liabilities of $10 million. They had 11 million units outstanding. In addition, their current assets totalled $13 million and current liabilities were $3 million. Which of the following statements regarding Great Lengths Equity Fund's net asset value per unit (NAVPU) is correct?

• A. There is not enough information available to calculate the NAVPU.
• B. Great Lengths Equity Fund's NAVPU is $11.36.
• C. Current assets and current liabilities are used in the NAVPU calculation.
• D. The NAVPU is the total liabilities divided by the number of outstanding units.

Answer: B

NEW QUESTION # 44
Wilma has always used the services of a tax preparation firm to file her taxes but is skeptical that she has really benefitted. This year she plans to file her own taxes for the first time.
What would be useful for her to know?

• A. Wilma's marginal tax rate may be lowered when tax deductions are applied to her total income.
• B. Wilma's tax deductions permit her to reduce her tax payable dollar-for-dollar.
• C. Wilma's non-refundable tax credits may only reduce her taxable income dollar-for-dollar.
• D. Wilma's top marginal tax rate will be applied to every taxable dollar when her tax return is filed.

Answer: A

NEW QUESTION # 45
At the close of business, Great Lengths Equity Fund had total assets of $135 million and total liabilities of $10 million. They had 11 million units outstanding. In addition, their current assets totalled $13 million and current liabilities were $3 million. Which of the following statements regarding Great Lengths Equity Fund's net asset value per unit (NAVPU) is correct?

• A. There is not enough information available to calculate the NAVPU.
• B. Great Lengths Equity Fund's NAVPU is $11.36.
• C. Current assets and current liabilities are used in the NAVPU calculation.
• D. The NAVPU is the total liabilities divided by the number of outstanding units.

Answer: B

Explanation:
Explanation
The net asset value per unit (NAVPU) of a mutual fund is calculated by dividing the net asset value (NAV) of the fund by the number of outstanding units. The NAV is the difference between the total assets and total liabilities of the fund. Current assets and current liabilities are not relevant for the NAVPU calculation.
Therefore, Great Lengths Equity Fund's NAVPU is ($135 million - $10 million) / 11 million = $11.36.
References: Canadian Investment Funds Course (CIFC) | IFSE Institute, Unit 8, Lesson 1

NEW QUESTION # 46
Sven owns preferred shares that give him the option to sell his holdings back to the issuing company at a predetermined price and within a specified time. What type of preferred shares does Sven own?

• A. retractable
• B. participating
• C. redeemable
• D. convertible

Answer: A

NEW QUESTION # 47
Nelson is a Dealing Representative with True Wealth Advisors Inc., a mutual fund dealer. Nelson follows proper procedures related to his firm's Relationship Disclosure Information (RDI). Which of the following CORRECTLY describes how Nelson is permitted to evidence that he satisfied his RDI obligation?

• A. Nelson can record detailed notes which confirm that he provided and explained the Fund Facts to the client within 2 days of the RDI.
• B. Nelson can formalize his relationship under the RDI using a Letter of Engagement that specifies duties, responsibilities, and level of service.
• C. Nelson may retain a copy of the RDI in the client file with detailed notes to confirm that he provided and explained the RDI to the client.
• D. Nelson may deliver the RDI to clients who request it and keep detailed notes of the clients who were provided with the RDI.

Answer: C

NEW QUESTION # 48
Which of the following statements about global equity funds is TRUE?

• A. They must invest almost exclusively outside of the Americas.
• B. They specialize in one or two countries.
• C. They may invest in all countries including the investment fund manager's home country.
• D. They are always less risky than Canadian equity funds.

Answer: C

Explanation:
Explanation
Global equity funds are a type of investment fund that invests in equity securities of companies from different countries around the world, including the investment fund manager's home country. Global equity funds aim to provide diversification and growth potential by taking advantage of the opportunities and risks in various markets and regions. Global equity funds may have different geographic, sectoral, or thematic focuses, depending on their investment objectives and strategies. Global equity funds are different from international equity funds, which invest only in countries outside of the investment fund manager's home country. Global equity funds are also different from regional or country-specific equity funds, which specialize in one or a few countries or regions. Global equity funds may have higher risk than domestic equity funds, as they are exposed to currency risk, foreign market risk, political risk, and regulatory risk.
References: Canadian Investment Funds Course, Chapter 4: Types of Investments1

NEW QUESTION # 49
Your clients, Jessica and Ken, want to buy a house next year. You recommend a money market fund. How do you think a money market fund will help Jessica and Ken reach their goal?

• A. Money market funds provide investors a guaranteed fixed rate of return.
• B. Money market funds are safe investments because their net asset value per unit does not usually fluctuate.
• C. Money market funds pay income weekly which can be automatically reinvested.
• D. Money market funds provide high returns without risking the capital invested.

Answer: B

Explanation:
Explanation
Money market funds are safe investments because their net asset value per unit does not usually fluctuate. Money market funds invest in highly liquid instruments like high-interest savings accounts, term deposits, short-term debt securities, cash equivalents, and other low-risk, short-term investments3. These funds aim to preserve capital and provide liquidity while generating some income3. Money market funds typically have a stable net asset value per unit (NAVPU) that does not change much over time3. The other statements are false. Money market funds do not provide high returns without risking the capital invested. Money market funds offer low returns that may not keep up with inflation or meet long-term investment goals3. Money market funds also have some risks, such as credit risk, interest rate risk, and liquidity risk3. Money market funds do not pay income weekly which can be automatically reinvested. Money market funds may pay income monthly, quarterly, semi-annually, or annually, depending on the fund's distribution policy3. Investors can choose to receive cash distributions or reinvest them in more units of the fund3. Money market funds do not provide investors a guaranteed fixed rate of return. Money market funds do not guarantee any return or principal amount3. The return of money market funds depends on the interest rates and yields of the underlying investments, which may vary over time3. References: 7 Best Money Market ETFs in Canada 2023:
Cash And HISA ETFs, Best Money Market Funds in Canada | WOWA.ca, 3 Best Canadian Money Market Funds (2023) - PiggyBank

NEW QUESTION # 50
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