IFSE Institute Canadian Investment Funds Course

QUESTION NO: 1
Raybert has a very short-term investment objective and has decided to purchase money market instruments.
There are plenty of 90-day money market securities available for him to choose from. Although Raybert is aware that all the respective issuers have a similar need for his capital, no matter what he decides, he can only afford to purchase one.
In terms of financial markets and their relationship to the principles of supply and demand, which characteristic of investment capital are the issuers being exposed to?

A. Risk B. Mobility C. Scarcity D. Sensitivity

Correct Answer: C

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 2
Ken is a member of his employer's Defined Benefit Pension Plan (DBPP). Which of the following statements about Ken's plan is CORRECT?

A. The amount that Ken will receive at retirement is not guaranteed. B. The amount Ken receives in retirement depends on the performance of the investments he has selected within the plan. C. Contributions to the plan do not result in a Pension Adjustment (PA) for Ken. D. Income received from the plan is eligible for pension income splitting even if Ken retires before 65.

Correct Answer: D

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 3
Which statement about unused registered retirement savings plan (RRSP) contribution room is CORRECT?

A. It can be carried forward a maximum of seven years. B. It may not be more than the RRSP contribution limit for the year in which it is carried forward. C. It may not be carried forward. D. It can be carried forward to future years.

Correct Answer: D

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 4
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?

A. ETFs can be purchased continuously throughout the trading day while index funds can only be bought or sold at the end of the day. B. The market price of ETFs always matches the underlying basket of securities while there can be a discrepancy in pricing index funds. C. ETFs do not have management fees since they are exchange traded while index funds do incur such fees. D. While ETFs are prone to tracking errors, index funds are perfectly aligned with their underlying index.

Correct Answer: A

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 5
What areas are addressed in the Client Relationship Model (CRM) regulation?

A. fraud prevention, relationship disclosure, and proper conduct B. relationship disclosure, client communications, and client reporting C. ethics, proper conduct, and client reporting D. client communications, regulatory reporting, and fraud prevention

Correct Answer: B

QUESTION NO: 6
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. George may open an RESP for Jeff but it will not quality to receive Canada Savings Education Grants (CESGs). B. If Jeff decides not to pursue a post-secondary education, he can keep all the CESG but it then becomes taxable. C. If Ellen receives the National Child Benefit Supplement (NCBS), Jeff may be eligible for the Canada Learning Bond D. If Jeff qualifies for additional CESG. his CESG lifetime maximum increases to $10,000.

Correct Answer: C

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 7
Which of the following individuals would qualify for a full or partial Old Age Security (OAS) pension?

A. Marcus, who is 60 years old, a Canadian citizen, and has lived in Canada for 20 years. B. Lenny, who is 65 years old and was born and raised in Canada, but lived in Jamaica from ages 25 to 65. C. Donald, who is 65 years old and has lived in Canada since his birth but worked in Australia for the past
10 years. D. Katrina, who is 75 years old and just immigrated to Canada from the U.S. last month.

Correct Answer: B

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 8
Megan purchases a treasury bill for $98,200. When it matures for $100,000, how does Megan treat the $1,800 difference?

A. as a dividend B. as return of capital C. as interest income D. as a capital gain

Correct Answer: C

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 9
Which of the following statements about registered education savings plans (RESPs) is CORRECT?

A. There is a yearly contribution limit per beneficiary. B. Contributions to RESPs are tax deductible. C. Contributed funds grow tax-free within the plan. D. RESPs must be collapsed by the end of the 31st year of its starting date

Correct Answer: C

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 10
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. asset allocation fund B. commodity pool C. balanced fund D. Canadian equity fund

Correct Answer: A

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 11
Lucas wants to participate in the Lifelong Learning Program (LLP). He currently has $10,000 in his registered retirement savings plan (RRSP) for this purpose. He plans to make his maximum permitted withdrawal of $10,000 under the LLP in two months. Based on this information, what would be his investment objective for the $10,000 currently sitting in his RRSP?

A. tax-deferral B. safety of principal C. growth D. income

Correct Answer: B

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

QUESTION NO: 12
Which of the following characteristics about mortgage mutual funds is CORRECT?

A. risk-free where the mortgages are National Housing Act (NHA) insured 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. typically monthly distributions of interest

Correct Answer: D

Explanation: Only visible for Pass4Test members. You can sign-up / login (it's free).

IFSE Institute Canadian Investment Funds Course - CIFC Exam Questions