Pass CIFC Exam to Get IFSE Institute Certification

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September 12, 2023

The CIFC exam is hot, and passing it requires a deep understanding of IFSE Institute solutions. Practicing with IFSE Institute CIFC dumps questions can help you reinforce your knowledge and increase your chances of passing the exam. CIFC dumps are available to help you prepare for the CIFC exam. Using CIFC exam dumps questions is one effective way to supplement your study plan and increase your chances of success on exam day. Test free Investments & Banking CIFC exam dumps below.

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1. You have been researching Canadian equity mutual funds for a new client.

You come across the following information.

What can you conclude from this information?

Chamberlain Equity Fund has lower volatility since its 5-year annualized return is higher.

Fontaine Equity Fund is a better fund because it has a higher quartile ranking.

Fontaine Equity Fund has a lower risk level since its Sharpe Ratio is lower.

Fontaine Equity Fund's higher MER contributes to its lower 5-year annualized return.

2. Sonya meets with her client Elijah to review different investment approaches that could be offered to help him reach his financial goals. Part of that discussion included Sonya mentioning factors such as inflation, interest rates, and rates of return.

Which stage of the Strategic Investment Planning (SIP) process does this describe?

Clarify Client Status, Problems and Opportunities

Identify Strategies and Present the Plan

Implement the Plan

Monitor and Update

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

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

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

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

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

4. What areas are addressed in the Client Relationship Model (CRM) regulation?

relationship disclosure, client communications, and client reporting

fraud prevention, relationship disclosure, and proper conduct

client communications, regulatory reporting, and fraud prevention

ethics, proper conduct, and client reporting

5. Sagira is a Compliance Officer with WealthPath Investments Inc., a registered mutual fund dealer. Sagira routinely answers inquiries from the firm's Dealing Representatives and offers guidance.

Which of the following statements would Sagira likely agree is a permitted activity for Dealing Representatives to have with clients?

Positions of influence are permitted if the terms and conditions of the regulator are met and the activity is approved by the dealer.

Borrowing from clients is prohibited, but personal loans to clients may be offered.

Purchasing real property from clients is permitted if there is a written agreement in place and the firm is party to the agreement.

Authority granted to a Dealing Representative over a client's account or finances must be documented under a Power of Attorney.

6. In which of the following situations would the client mobility exemption apply?

Olaf is a registered dealing representative in Sunnyside, Prince Edward Island. His client Jules is moving to Moncton, New Brunswick. Olaf's mutual fund dealer is not currently registered in New Brunswick but is in the process of applying there.

Sigrid's brother-in-law has agreed to be her client. She is a registered dealing representative in Ottawa, Ontario and he lives in Hull, Quebec. Both Sigrid and her mutual fund dealer are currently registered in Quebec.

Although her mutual fund dealer is registered in all provinces and territories, Lori is only registered as a dealing representative in Saskatchewan. Last year, three of Lori's clients moved to Alberta and now two more are moving to that province. Lori wants to continue servicing these clients.

Karl is a registered dealing representative in Dauphin, Manitoba. 30 of his clients who work for the same company are being relocated to British Columbia. He wants to retain these clients. His mutual fund dealer is registered in British Columbia, but Karl is not.

7. Exchange traded funds (ETFs) that track an index and index mutual funds have many similarities.

However, what is a major difference between these two products?

While ETFs are prone to tracking errors, index funds are perfectly aligned with their underlying index.

ETFs can be purchased continuously throughout the trading day while index funds can only be bought or sold at the end of the day.

The market price of ETFs always matches the underlying basket of securities while there can be a discrepancy in pricing index funds.

ETFs do not have management fees since they are exchange traded while index funds do incur such fees.

8. Ayan wants to make a registered retirement savings plan (RRSP) contribution and deduct it from his Year 1 income.

What is the deadline for this contribution (assume that it is NOT a leap year)?

March 1, Year 1

March 1, Year 2

December 31, Year 1

December 31, Year 2

9. Which statement about unused registered retirement savings plan (RRSP) contribution room is CORRECT?

It may not be more than the RRSP contribution limit for the year in which it is carried forward.

It can be carried forward to future years.

It can be carried forward a maximum of seven years.

It may not be carried forward.

10. Grant is a Dealing Representative with WealthPlus Securities Inc. Grant becomes a volunteer member of his local arena's Hockey Association and is appointed as the Association's new Treasurer.

Which of the following statements about Grant's appointment as Treasurer is CORRECT?

If Grant is not compensated for the Treasurer position, his firm's approval is not required.

Grant must obtain the firm's approval before he starts the Treasurer position.

Since Grant holds the Treasurer position on a voluntary basis, it is not an outside activity.

Grant must disclose the Treasurer position to his firm once he has accepted the position.

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11. 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?

Money market funds are safe investments because their net asset value per unit does not usually fluctuate.

Money market funds provide high returns without risking the capital invested.

Money market funds pay income weekly which can be automatically reinvested.

Money market funds provide investors a guaranteed fixed rate of return.

12. 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)?

$1,198

$1,216

$1,256

$1,332

13. While assessing the suitability of an investment recommendation as a Dealing Representative, which statement applies to the "Client's Interest First" standard?

Presenting a fund's historical investment performance to anticipate a mutual fund's future rate of return.

Clarifying for clients the costs and fees associated with mutual funds and how they impact investment performance.

The use of a risk-based approach when determining which mutual fund to recommend to the client.

Accurately document Know Your Client information (KYC) so there is evidence to support a recommendation.

14. Francis wants to redeem his US Asset Allocation Fund as he needs the money for a down payment for a home purchase. The current proceeds from the redemption are USD $27,859, and the current CAD/USD exchange rate is 0.7353.

How much will Francis receive in Canadian dollars when he redeems the Funds? Please round your answer to the nearest dollar.

$37,888

$36,698

$42,861

$35,859

15. Danny is a Dealing Representative for Everbright Investments. He met with his client Adele, who has $1,000,000 to invest. During their meeting Danny determines that Adele has a high-risk profile. In addition, he learns that she has an excellent understanding of equities and how volatile they can be.

Danny is considering recommending growth funds specifically, and making a recommendation from the following investment options:

Based on the information provided, which mutual fund should Danny recommend?

ABC Global Equity Fund.

DEF European Equity Fund.

LMN Asia Pacific Equity Fund.

Invest equally in all 3 funds.

16. Axis Wealth Management Inc. is a mutual fund dealer and member of the Mutual Fund Dealers Association of Canada (MFDA).

Indrek is a Branch Manager for the Guelph Branch and he is responsible for conducting suitability reviews in order to identify any unsuitable transactions or accounts.

Which of the following accounts/transactions would be unsuitable?

Gilles has invested in various mutual funds using a leverage strategy recommended by his Dealing Representative. Gilles is 82, he is retired, he needs regular income, and his risk profile is "low".

Hundolf holds the Fortune Small Cap Equity Fund. Hundolf is fully employed, he is saving for his retirement in 18 years, his investment objective is "growth", and his risk profile is "medium-high".

Megara bought a principal protected note (PPN) with a 7-year maturity. Megara wants principal protection and has a long-term investment time horizon (10+ years).

Ulani is saving for the final payment she will owe on her pre-construction condominium. Ulani has invested in the Harbour Money Market Fund because she is seeking "safety".

17. When comparing the current yield and yield-to-maturity of a bond, which statement applies?

Yield-to-maturity accounts for the reinvestment of coupon payments.

Yield-to-maturity is based on the current market value of the bond, not the price paid.

Capital gains or capital losses are reflected in the current yield calculation.

Current yield includes in the calculation the time to maturity.

18. Which of the following statements is TRUE about inflation?

Inflation results in a redistribution of income from borrowers to lenders.

Generally inflation will benefit those who are living on investment income.

Purchasing power rises as inflation rises.

An increase in the inflation rate could mean investors have less money to invest.

19. 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?

Do you want to minimize taxes from your investments?

What rate of return do you expect from investing?

Do you understand the relationship between risk and return?

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

20. Jasmine received an inheritance from her grandmother of $10,000. She wants to invest her money wisely. She has seen in the news that a particular energy company is doing very well and has good prospects. She has also seen how volatile its share price has been in the last year. She knows the risks of the resource sector and wants to invest but is not comfortable with so much volatility.

Which of the following mutual fund benefits would address her concern?

convenience

low cost

diversification

liquidity

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21. 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?

Lydia is only permitted to contribute cash to her RRSP not units of her mutual fund.

Lydia's RRSP contribution will be valued at $4,500.

Lydia's RRSP contribution will be valued at $10,600.

Lydia will incur a capital gain of $4,500 from the contribution.

22. 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?

Wilma's marginal tax rate may be lowered when tax deductions are applied to her total income.

Wilma's top marginal tax rate will be applied to every taxable dollar when her tax return is filed.

Wilma's tax deductions permit her to reduce her tax payable dollar-for-dollar.

Wilma's non-refundable tax credits may only reduce her taxable income dollar-for-dollar.

23. Which of the following CORRECTLY describes a material conflict of interest that has been properly addressed by the Dealing Representative?

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.

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.

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.

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 mutual funds with a lower ME

24. Which of the following statements about your mutual fund registration is CORRECT?

You can sell mutual funds anywhere in Canada as long as you are registered with one of the provincial or territorial securities commissions.

Your online application must be reviewed and approved by your mutual fund dealer before you can begin to sell mutual funds.

You must renew your registration through the online NRD system every two years.

You must inform the regulatory authorities of any material or significant changes to your personal circumstances.

25. One of your clients, Sheldon, is 65 years old. He has $30,000 to invest. He has a low risk profile, and an investment objective of receiving regular income. He has a time horizon of 5 years.

Based on Sheldon's risk profile and investment objective, which of the following investment recommendations is MOST appropriate for Sheldon?

ABC common shares which had a 20% annual yield during the previous 5 years.

3% Government of Canada Bonds at par, which have a maturity that coincides with Sheldon's time horizon.

FEG Labour-Sponsored Fund which will give him a tax benefit.

Debentures of XYZ Corporation will give Sheldon a regular income and an attractive yield.

26. Russell is a Dealing Representative with Wealth Quest Strategies Ltd., a mutual fund dealer and member of the Mutual Fund Dealers Association of Canada (MFDA). Russell is developing his website to include sales content on a Target Date Fund.

Which of the following is Russell permitted to include on his website about the Target Date Fund?

i. the asset mix through the life of the fund until the future date

ii. the expected decline in the fund's risk level as the fund reaches its target date

iii. the guaranteed return that the client will receive on the future date

iv. a graphic illustration of the fund's promised growth on target date

i and ii

i and iii

ii and iv

iii and iv

27. What trait or characteristic is normally associated with a person who would be designated as a Trusted Contact Person (TCP)?

Normally has a financial interest in the client's account or assets.

Often involved with providing care for the client who requires personal assistance.

Has the authority to make financial decisions on behalf of the client.

Can simplify difficult financial concepts for the client.

28. Which of the following statements are CORRECT about labour sponsored investment funds (LSIFs)?

LSIFs are appropriate for investors with a short-term time horizon.

All provinces offer some sort of additional tax credit for investors.

LSIFs are suitable for investors with a low risk tolerance.

Investors will forfeit their tax credits if they redeem their LSIF investment before 8 years have elapsed.

29. Preston has been working for Thompson Industries for just over a year and has been part of Thompson's deferred profit sharing plan (DPSP) program from his start date. Preston wants to know more about these types of plans.

What would you tell Preston about DPSPs?

The employer is obliged to make DPSP contributions for an amount equal to employee contributions.

Once the plan is set up, the employer is obliged to make plan contributions each year.

DPSP contributions are tax-deductible to the employer.

Investment growth within the plan is taxable each year.

30. Which information is typically included in the Letter of Engagement?

Client's responsibilities

Process for complaints

Investment Objective

Payee for deposits

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31. Xerxes, 45 years old, is a successful architect, having an annual income of $185,000. He has around $10,000 in his non-registered account, which he is looking to invest in a tax-efficient manner.

From the following options, which would be the most tax-efficient?

target date fund

bond fund

asset allocation fund

Canadian equity index fund

32. Your client, Helen, just received her non-registered account statement which states that one of her mutual funds made an interest income distribution during the year. She asks you how she will be taxed on the distribution.

What do you tell Helen?

She will pay taxes on 50% of the distribution.

She will pay taxes at her top marginal tax rate.

She will pay taxes on the grossed-up amount of the income.

She will pay taxes at her average tax rate.

33. What information does Fund Facts provide to potential investors?

What the mutual fund is currently investing in.

How to calculate the taxes owed from investment income.

The portfolio management strategy that is used.

The remuneration paid to the Independent Review Committee.

34. Gershon is a Dealing Representative and he opens a new account for his client, Isaac. Gershon collects the necessary information from Isaac in order to designate the Trusted Contact Person (TCP) for Isaac’s account.

Which of the following statements about Isaac’s TCP is CORRECT?

The TCP is an alternative to a Power of Attorney (PQA) and has the authority to make changes to Isaac's account and direct trading.

The TCP is an alternative authority on Isaac's account that has the power to place a temporary hold on Isaac's account to disallow trading.

The TCP is the person whom Gershon can speak to if he becomes concerned about Isaac's mental capacity to make financial decisions.

The TCP is the person who is designated with authority to direct financial dealings for Isaac's account and make financial decisions.

35. Which investor's needs would be BEST met with an income trust?

Tina wants a product that guarantees the return of at least 75% of her capital upon maturity of the contract or upon her death.

Leanne wants a product that employs alternative strategies such as leverage and short selling to amplify returns.

Gary wants to invest in a product which provides a consistent cash flow of interest, royalties, and lease payments passed along to unitholders.

Phil wants to invest in a product where the performance is linked to that of an underlying asset and the issuer is obligated to repay his principal at maturity.

36. Every February, Reginald, a Dealing Representative, feels pressured by his Manager to generate new registered retirement savings plans (RRSP) and contributions to assist the branch in meeting broader business targets. Reginald is nearing the end of February, and he has a meeting with a new client, Orel. Orel wants to open a tax-free savings account (TFSA) to develop emergency savings because he does not want to worry about his withdrawals being taxed. Reginald suggests that if Orel were to contribute to an RRSP first, then the resulting tax savings could be used to fund a new emergency account.

In relation to account suitability, what can be said about Reginald’s advice?

Recommending an investment solution that addresses two needs is putting Reginald's client's interest first

Based on Orel's stated need, recommending an RRSP contribution is unsuitable.

Reginald is putting the client's interest first by informing Orel why he should change his purpose for investing.

By convincing Orel to contribute an RRSP, instead of a TFSA, Reginald has put his client's interest first.

37. Which of the following statements is true when comparing fund of funds to traditional mutual funds?

Fund of funds have higher fees than traditional mutual funds since there are two sets of management fees.

Fund of funds have more asset class options available and lower fees than traditional mutual funds.

Since fund of funds invest primarily outside Canada, they will have higher fees than traditional mutual funds.

Fund of funds have more fee structure options available and lower fees than traditional mutual funds.

38. Pierre buys a call option on a stock.

What is the implication of this transaction?

Pierre has the right to buy the stock if he exercises the option.

Pierre is obligated to sell the stock if the option is exercised.

Pierre has the right to sell the stock if he exercises the option.

Pierre is obligated to buy the stock if the option is exercised.

39. Which of the following statements about global equity funds is TRUE?

They may invest in all countries including the investment fund manager's home country.

They must invest almost exclusively outside of the Americas.

They are always less risky than Canadian equity funds.

They specialize in one or two countries.

40. Which of the following statements best describes dollar-cost averaging?

It is a type of systematic withdrawal program.

It is buying a set dollar amount of a mutual fund on a regular basis

It is the strategy of purchasing a set number of units of a mutual fund on a regular basis.

It is making lump-sum purchases when the market price for a mutual fund is low.

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41. Which among the following BEST describes a company's retained earnings statement?

a company's financial position at a specific point in time

the amount of money contributed to the company by its shareholders or owners

the amount of profit that is reinvested in the company

the earnings and expenses of a business over a period of time

42. Which statement regarding the Fund Facts document is CORRECT?

Before accepting an order from a client, a Dealing Representative is expected to provide and explain the Fund Facts document.

The Fund Facts document must be delivered to the client, electronically or in writing, within 5 days of the transaction date.

For leveraged accounts, the Fund Facts document is not required if the client has been provided with the Leverage Risk Disclosure document.

The Fund Facts document must not contain performance data.

43. Your clients, Philip and Helen, have a disabled son, Alex, age 22. They want to set up a registered disability savings plan (RDSP) for Alex and have asked you for some information.

Which statement is TRUE?

Philip and Helen's contributions are refundable to them.

There is no annual or lifetime maximum limit on contributions.

Alex must quality for the disability tax credit.

Philip and Helen's contributions are tax-deductible.

44. Saheed is a retiree who is considering splitting his pension income with his wife, Minu.

Which of the following outcomes may occur if he shares his pension benefits?

Whether the couple saves on income tax will be dependent on Minu's marginal tax rate.

Minu will be exposed to a pension adjustment (PA) if she receives income from his pension.

This is a form of tax evasion and is therefore considered illegal based on income tax legislation.

Regardless of how much income each person reports, the total amount of income taxes will not change.

45. Taylor is chatting with other parents in the park when the conversation turns to registered education savings plans (RESPs). Taylor thinks that most of what they are saying is incorrect.

Which of the following statements about self-directed RESPs is TRUE?

The government contributes an additional grant for low income families who qualify.

Only one beneficiary may be named per RES

Educational Assistance Payments (EAPs) may only be used for tuition for a post-secondary program.

Educational Assistance Payments (EAPs) withdrawn from the plan are not taxable.

46. Kerry's total income this past year was $100,000 and she claimed a tax deduction of $2,000.

When the tax return is filed, what would be the federal tax payable when applying the following federal tax rates? (Round to the closest whole dollar for the final answer.)

$17,472

$18,754

$24,000

$25,480

47. Khuyen is a Dealing Representative for Stark Contrast Investments. Her dealer has relationships with 20 different mutual fund families. This gave her the flexibility to sell two different types of funds from two

different fund families to her client, Bao. $5,000 was invested in the Blue Moon Global Balanced fund and an additional $5,000 was invested in the Orange Sun Asset Allocation fund. Khuyen has been reviewing the performance of both funds and has determined that Bao would be better off being fully invested in the Blue Moon Global Balance fund. Bao had previously signed a Limited Authorization Form

(LAF) for Khuyen, so she goes ahead and does not worry about consulting with Bao before making the change.

What type of activity has Khuyen performed?

Top-down management

Churning

Discretionary trading

Value investing

48. Which of the following is included when calculating a country's gross domestic product (GDP)?

total income of all employed individuals

the cost of all goods produced

the market value of goods and services sold to final users

the value of work done by volunteers

49. When you buy a put option, which of the following is TRUE?

You have the right to sell a set number of shares at a set price.

You have the right to purchase a set number of shares at a set price.

You have the obligation to sell a set number of shares at a set price.

You have the obligation to buy a set number of shares at a set price.

50. Which of the following statements regarding mutual fund fees is correct?

Redemptions are made from units held by investors to pay trailer fees.

Trailer fees are only paid to mutual fund dealers when a purchase is made.

The mutual fund dealer receives trailer fees based on the value of assets under management.

Trading commissions are paid from the management fee.

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51. Jabir recently joined Prosper Wealth Inc. and is looking forward to being a Dealing Representative for the firm.

Which of the following statements CORRECTLY describe when Jabir will be eligible to open new client accounts and sell investments?

Upon registration application by the dealer

Upon employment with the dealer

Upon formal confirmation from the regulator

Upon passing the proficiency course

52. Daisy is a Dealing Representative registered in the province of Saskatchewan only. Daisy’s client, Orville, a resident of Lloydminster, Saskatchewan is a retiree who presently has a $1,000,000 with her dealer, Easy Ride Financial. Orville is now planning to move to Vegreville, Alberta next month. Easy Ride Financial is registered in Alberta and Saskatchewan. Neither Easy Ride Financial nor Daisy have any clients who are resident in Alberta.

Which of the following should Daisy do if she wants to continue to service Orville’s account?

Request approval from the Mutual Fund Dealers Association of Canada to be eligible to be a registered Dealing Representative in Alberta

Daisy could seek permission from her dealer to request a client mobility exemption with the Alberta Securities Commission.

Daisy will need to forfeit her registration in Saskatchewan if she wants to be registered in Alberta to keep Orville as a client.

53. Which of the following could be a passively managed fund?

commodity pool

exchange traded fund (ETF)

hedge fund

labour-sponsored investment fund

54. Which of the following applies to a mutual fund trust?

It has a board of directors and shareholders.

It has unitholders.

It is not efficient at passing through income to investors.

It is always closed-end.

55. Which of the following is typical for a normal yield curve?

short and long term rates are the same

long term rates are lower than short term rates

yields decline as term to maturity increases

short term rates are lower than long term rates

56. Gregory is a conservative investor who wants to hold a portfolio of equity securities that would fall less than the overall market in a downturn.

Which of the following portfolios would you advise Gregory to invest in?

a portfolio with a beta equal to 1

a portfolio with a beta between 1 and 2

a portfolio with a beta greater than 2

a portfolio with a beta less than 1

57. Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?

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.

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.

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.

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.

58. Sandra presently participates in her employer-sponsored defined contribution pension plan (DCPP).

As contributions continue to be made into her plan, what can she expect?

Retirement benefits will be based on a prescribed formula that can be referenced from the plan's terms and conditions.

The employer will solely make contributions to her DCPP based on a prescribed formula noted within her plan.

Her available registered retirement savings plan (RRSP) contribution room will be reduced by what is being contributed to her plan.

To ensure she has savings at retirement, the employer will choose stable investments to grow her retirement savings.

59. Stan, a portfolio manager, is looking at two steel companies as potential investments. Truesteel Inc.

has a current ratio of 2:1 while Strongco Ltd. has a current ratio of 0.8:1.

What could this information indicate?

It appears that Truesteel is more profitable than Strongco.

Truesteel is better able to meet its short-term financial obligations than Strongco.

The stock market is more optimistic about the prospects for Truesteel than Strongco.

Stronqco is reiving less on debt financing than Truesteel.

60. 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?

Canadian equity fund

balanced fund

commodity pool

asset allocation fund

Page 7 of 7

61. Which of the following is a characteristic of a bond fund?

Income from a bond fund will primarily be interest but may also be capital gains

Bond funds are very low risk because they never go down in value.

If interest rates rise the value of a bond fund will also tend to rise.

Securities regulation specifies that bond funds must invest in investment grade bonds.

62. Which statement regarding the underwriting process and over-the-counter (OTC) markets is CORRECT?

Corporations must have their shares listed both on an exchange and the OTC market during the underwriting process.

During the underwriting process investment bankers raise investment capital from investors on behalf of corporations and governments issuing securities.

Many new stock issues that are underwritten by securities firms are first listed on a stock exchange before they are sold over-the-counter.

The disclosure standards for stock exchanges are not as stringent as those imposed by the OTC market.

63. Which of the following statements about total return for money market funds is TRUE?

Performance is displayed with both current yield and effective yield.

Effective yield will always be lower than current yield.

Current yield incorporates the compounding effect.

Current yield reflects the income earned on a money market fund for the most recent 14 day period.

64. For what reason do different entities have securities created and sold?

Government debt is reduced due to the capital that is received from investors when their securities are purchased.

When common shares are initially sold, the capital raised will increase the issuing corporation's retained earnings.

Governments can address financial needs and support initiatives when securities are first sold.

The issuance of securities is a method used by corporations to redistribute their wealth to investors to lower taxes.

65. Salvatore and Harriet recently got married. They are presently renting but are looking forward to buying a new home within 5 years. They both have separate savings established in their respective registered retirement savings plans (RRSPs) of $100,000 each. They have come to Dustin, a Dealing Representative, to open an additional joint investment account to increase their savings to assist with their future plans of buying a new home.

What does Dustin need to ensure about his recommendation?

That the recommended investment is different from what they currently own to avoid over-concentration.

That the risk profile for this new account is the same as what has been determined for other accounts.

That the risk profile of the investment and each client's individual risk profile are a match.

That the investment recommendation is based on the risk profile of the new joint account.

66. Darryl has a diversified investment portfolio of mutual funds in a non-registered account with Investwell Mutual Funds, a mutual fund dealer. Darryl’s diversified portfolio is composed of 3 mutual funds. Each mutual fund is currently worth about $100,000. The ABC Canadian Equity Fund has a total return of 6%, the DEF Bond Fund has a total return of 8% and GHI Global Equity Fund has a total return of 10%. Darryl wants to make an in-kind contribution to his registered retirement savings plan (RRSP) account. He has unused RRSP contribution room of $60,000.

From a tax-efficient viewpoint, which funds contribute in-kind to his RRSP account?

Move the DEF Bond Fund to the RRS

Move the GHI Global Equity Fund to the RRSP

Move $20,000 from each of the three funds to the RRS

Move the ABC Canadian Equity Fund to the RRS

67. One of your clients, Rakesh, had a portfolio composed of 60% ABC Equity Fund and 40% ABC Bond Fund. Since equities were performing much better than fixed income, he had increased his holdings in ABC Equity Fund to 70% and had reduced his holding in ABC Bond Fund to 30% of his portfolio.

After benefitting the growth in his ABC Equity Fund for over 2 years, Rakesh is uncomfortable with this heavy exposure to equity funds and decides to rebalance his portfolio back to 60% of ABC Equity Fund and 40% of ABC Bond Fund.

He instructs you to switch 10% of the portfolio from the ABC Equity Fund to the ABC Bond Fund.

Which of the following statements is CORRECT?

Rakesh will not be subjected to a switch fee if it is outlined in the prospectus.

Rakesh will not be subjected to a switch fee if his equity fund is a no-load fund.

Rakesh will not be subjected to a switch fee if his original units were purchased with a sales charge.

Rakesh will not be subjected to a switch fee if his equity fund is a low-load fund.

68. Which of the following are obligations on mutual fund dealing representatives imposed by The Proceeds of Crime (Money Laundering) and Terrorist Financing Act?

record-keeping of large transactions, account-related information, and other relevant records

reporting all financial transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

enhancing public awareness of matters related to money laundering and terrorist financing

confirming client identity each time before concluding any transaction

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