Investment Funds in Canada (IFC) Exam
Last Update Jan 14, 2026
Total Questions : 447
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For the last year, an investor earned a return before adjustment for inflation of 2% on a money market fund, while inflation averaged 1.5%. What was his nominal rate of return?
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?
Janine will celebrate her 71st birthday this year. She currently has a lot of money in a personal registered retirement savings plan (RRSP) and knows there are rules about what she can do with those funds. Which of the following is TRUE?
When comparing mutual funds, what information would help a Dealing Representative determine a suitable mutual fund for a client?
Which option is most appropriate for investors who prefer growth-oriented mutual fund trusts?
One of your clients, Fernando, is approaching 71 years of age and has a few questions regarding life income funds (LIFs).
Which of the following statements about LIFs is TRUE?
In which of the following situations would the client mobility exemption apply?
Bernadette has a high-paying job and is in the top tax bracket. She recently received a payment of $5 million upon the settlement of her uncle's estate. Bernadette would like to invest her inheritance in financial products that would not only grow her money but is also income tax friendly.
Which of the following would provide the most favourable tax treatment?
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?
Sachin owns units of a long-term bond fund. He has heard that the Bank of Canada is likely to make it more expensive to borrow money. He is worried that the value of his investment is going to drop. What sort of investing risk is Sachin experiencing?
Which document contains information regarding the Independent Review Committee compensation?
Which statement best describes one of the main differences between short and long transactions?
Fred's client, Matteo, holds a technology-themed mutual fund. The fund's investment objective recently changed, allowing it to hold various cryptocurrencies, resulting in a high-risk rating and making it unsuitable for Matteo. Fred discussed the change with his client, but Matteo insisted on continuing to hold the fund. What action must Fred take?
Which of the following actions by the federal government or the Bank of Canada is an example of monetary policy?
Evan owns retractable preferred shares of Ingram Corp. Which statement CORRECTLY describes a key feature of Evan's shares?
What is the current yield on a $5,000 Government of Canada bond paying a 6% coupon and trading at a price of $102 (rounding to the nearest hundredth)?
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?
Which of the following statements about capital gains distributions from mutual fund trusts is correct?
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?
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?
What type of mutual fund can invest in specified derivatives and forward contracts for grains, meats, metals, energy products, and coffee?
Marta is turning 71 years old this year. She will have to convert her registered retirement savings plan (RRSP) to a registered retirement income fund (RRIF). Which of the following statements is TRUE?
Which exchange in Canada deals exclusively with financial and equity futures and options?
What do Guaranteed Income Supplement (GIS) and Allowance for the Survivor have in common?
Bernadette has a high-paying job and is in the top tax bracket. She recently received a payment of $5 million upon the settlement of her uncle’s estate. Bernadette would like to invest her inheritance in financial products that would not only grow her money but is also income tax friendly.
Which of the following would provide the most favourable tax treatment?
As per CIRO policy, what is a required step after receiving an emailed client complaint regarding dissatisfaction with a product?
Sofie is a busy mutual fund sales representative. She would like to move clients that are invested in low-yielding cash accounts to her firm’s higher-yielding proprietary money market mutual fund. She confirms the orders with the clients, then instructs her new sales assistant, who will write the IFC exam next week, to enter orders to buy units in this fund. How has Sofie violated the standards of conduct?
What trait or characteristic is normally associated with a person who would be designated as a Trusted Contact Person (TCP)?
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?
Ian is 25, employed, and has no dependents. He has no current financial or family obligations. He has asked for your recommendation for investing a $50,000 inheritance. What asset allocation would typically suit an investor with Ian’s characteristics?
A portfolio manager of a bond fund who believes interest rates will fall should do what?
Megan purchases a treasury bill for $98,200. When it matures for $100,000, how does Megan treat the $1,800 difference?
When selecting an investment to add to a portfolio, what feature would reduce the overall risk?
Your client, Cosmo, recently inherited $50,000 from his uncle. He wants to use this money towards his retirement savings. Cosmo is a 50-year old, self-employed carpenter and he earns on average $65,000
per year. He has a registered retirement savings plan (RRSP) with the bank worth $425,000 and a tax-free savings account (TFSA) worth $46,000. He started saving when he was 25 years old and has always
made his own investment decisions. His money is mostly invested in balanced funds. He feels most comfortable with these types of mutual funds since they offer potential investment growth but without being too aggressive. Cosmo has no other assets.
What additional information do you need about Cosmo to fulfill your know your client obligation?
Your client contacts you requesting that you purchase a mutual fund based on a “hot tip” from a friend who has been a successful investor. What bias is your client most likely being affected by?
On which of the following does the Personal Information Protection and Electronic Documents Act (PIPEDA) impose requirements?
You are concerned about upcoming weakness in the Canadian dollar. Which type of fund should you invest in?
Which Sharpe ratio result would indicate that the fund earned a return less than the risk-free return?
When comparing the current yield and yield-to-maturity of a bond, which statement applies?
Dave purchases 10,000 units of a no-load US-dollar denominated mutual fund for US$15 per unit for a total cost of $165,400 Canadian. He later sells the units for US$16 per unit, with a loss of $11,400 Canadian. To what type of risk has Dave been exposed?
When purchasing a mutual fund, what is the correct way to determine the number of units purchased if the order was entered today at 2:30 p.m. ET?
Leira has a marginal tax rate of 45% and may deduct $5,000 in registered retirement savings plan (RRSP) contributions on her income tax return. If she decides to use her available deduction and assuming
this does not reduce her taxable income to a lower tax bracket, by how much will it reduce her tax payable?
Which of the following statements are CORRECT about labour sponsored investment funds (LSIFs)?
Natasha currently owns 2 mutual funds: a bond fund and a Canadian equity fund. She would like to use one of them as her registered retirement savings plan (RRSP) contribution for the year. From a tax efficiency perspective, which mutual fund should she contribute?
Which of the following is included when calculating a country's gross domestic product (GDP)?
Which among the following BEST describes a company's retained earnings statement?
During the calendar year, Firmansyah received a $1,800 eligible dividend from a large Canadian bank and a foreign, dividend from his The USD/CAD exchange rates is 1.3605.
Firmansyah’s federal marginal tax bracket is 29%. The enhanced dividend gross-up rate is 38% and the federal dividend tax credit rate for eligible dividends is 15%.
What federal tax liability will be due from the investment income?
What type of pension plan usually provides better protection against inflation up to the time of retirement?
Eleanora receives a $500 eligible Canadian dividend from her mutual fund. Her federal marginal tax rate for the year is 29%. Assuming the enhanced gross-up of 38% and a federal dividend tax credit of 15.02%, how much federal tax will she pay on her dividend?
How is a $10,000 withdrawal from a registered retirement savings plan (RRSP) taxed?
What is a general observation of the Canadian mutual fund industry's evolution?
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?
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?
Patrick is a portfolio manager for the HyperTally Growth Fund. It has generated an annualized rate of return of 10% this past year. However, with the anticipation of very high inflation to soon occur, there is also an expectation of higher interest rates. Patrick is concerned about the future returns of existing stocks within the fund. What may Patrick do to protect against the market value of the fund dropping?
A dealing representative explains the past performance of a mutual fund to a potential client, discussing the annual simple returns and compound returns that the fund had earned. She concluded by indicating she expects the fund’s NAVPU was likely to rise at similar rates in the future, given the economic outlook. What unacceptable selling practice has occurred?
Lior is considering an investment that gains exposure to companies that trade on the Toronto Stock Exchange (TSX). He is not sure what the differences are between a Canadian equity fund and a Canadian dividend fund.
What would you tell him?
Which of the following statements about your mutual fund registration is CORRECT?
An investor wishes to add another security to his portfolio. He is looking at a stock that has a correlation with the portfolio of 0.99. What should the advisor tell this investor?
The demand for blue widgets increases sharply due to a newspaper report that using blue widgets improves recovery from influenza. What can be said about the law of supply?
Carol contributed $500 to her TFSA. $350 was invested in ABC Bank Canadian equity fund and $150 in the ZYX Global growth fund. The expected return for the funds is 8% and 9.8%, respectively. What is the expected return on her TFSA?
Apex Mutual Fund has been structured to avoid taxation by distributing any net interest, dividends, and capital gains to unitholders each calendar year. This is an example of what type of mutual fund structure?
What term applies to unemployment created by a new technology that eliminates the need for subway train drivers?
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?
Faruq is a Dealing Representative with Smart Planning Group, a mutual fund dealer. Faruq meets with his new client, Taline, and learns that she lives on a low, fixed income.
Taline tells Faruq that she wants to maximize her investment returns as high as possible to make up the difference. Taline also indicates that she cannot afford large investment losses because her income is low. Which of the following CORRECTLY describes how Faruq should assess Taline’s risk profile?
Last year, a hedge fund had a gross return of 22%. The hurdle rate was 5%, and the incentive fee was 20%. What percentage compensation would the fund manager earn for this strategy, assuming no other fees exist?
Last year at age 70, Gregory opened a registered retirement income fund (RRIF). Recently, Gregory unexpectedly received a large cash gift and presently does not need to depend on any payments from his RRIF. He contacts his financial advisor Eric for guidance.
Which of the following statements by his financial advisor would be CORRECT?
BUG Inc. has a beta of 1.65. If the market drops by 18.48% over the next 12 months, by approximately how much could BUG Inc. shares fall over that time period?
Calculate the 2-year simple return for the AAA Mutual Fund.
AAA Mutual Fund Performance
Year | Price at Beginning | Distribution | Price at End | Simple 1-Yr Return
1st Year | $10.00 | $0.25 | $11.00 | 12.50%
2nd Year | $11.00 | $0.25 | $10.20 | -5.00%
Which of the following statements about registered education savings plans (RESPs) is CORRECT?
Jenny contributed $5,000 each year for five years to a spousal RRSP in Albert's name. In the sixth calendar year, Jenny did not contribute and Albert withdrew all the funds from the spousal RRSP. What are the tax implications of the withdrawal for Albert and Jenny?
What portion of the withdrawal from a Registered Educational Savings Plan is tax-free?
Four fund managers are comparing their quartile rankings over the past four years:
Which fund manager would likely be most satisfied with their fund's performance history?
What items are typically classified as current assets on the statement of financial position?
Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?
All other factors being equal, which fund outperformed the benchmark during this period? The benchmark return is 4.75%.
Fund
Starting NAV ($)
Ending NAV ($)
ABC
21.15
22.09
FED
25.37
26.61
MCQ
30.14
31.55
XYZ
31.00
31.99
Irina Pluskova is a financial advisor for a multi-national firm. She is a well-known personality within the local community for her philanthropic work with children's charities. What must Irina do to uphold the Standards of Conduct?
Jeff is a new client. He is 50 years old with modest savings in the low six figures, and wants to reinvest his portfolio to ensure that he can retire comfortably at age 65. In his meeting with Jeff, the advisor uncovered some of Jeff’s biases. Jeff displayed several strong emotional biases along with a few weak cognitive biases. What should the advisor do?
Which factors would cause the management expense ratio charged by a mutual fund to be higher?
The fund invests in foreign equities
The fund is large in size
The fund is managed by the fund sponsor’s management team
The fund pays a trailer fee
Zara buys a future contract with an underlying value of $100,000 worth of stocks. She is required to deposit $1,750 of margin. Two weeks later, the underlying value of the stocks is $101,900. What is Zara's total return?
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?
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?
Terri, 30 years old, is the marketing manager at Provincial Winery with an average annual income of $60,000. Her spouse Yvette, 28 years old, is a project manager with a telecommunications firm earning
$70,000 per year. You are helping them to organize their investments and are trying to assess their financial resources.
Which of the following is the best question to ask?
Which of the following form part of the disclosure documents relating to mutual funds?
What type of shares offer its shareholders the opportunity to receive additional dividends if the company’s profit exceeds a stated level?
10 years ago, Felipe opened a registered retirement savings plan (RRSP) account and purchased a mutual fund. The mutual fund purchased included a 7-year deferred sales charge (DSC). At the time of making his investment, him and his Dealing Representative agreed that he had a 25-year growth objective. Since Felipe knew that he was not planning to use his investment until he retired, he was not
concerned about the DSC. Although the rate of return did vary from year-to-year, he never noticed his mutual fund having a drop in value. This gave Felipe more confidence in the investment. As a result, he has never made any changes to his investment.
What category of Know Your Client (KYC) information has been given?
Which of the following statement about Exchange Traded Funds (ETFs) is TRUE?
During the calendar year, Firmansyah received a $1,800 eligible dividend from a large Canadian bank and a $US dollar (USD) dividend of $882.02 from a foreign-based corporation. The USD/CAD exchange rates is 1.3605.
Firmansyah's federal marginal tax bracket is 29%. The enhanced dividend gross-up rate is 38% and the federal dividend tax credit rate for eligible dividends is 15%.
What federal tax liability will be result from his investment income?
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 portfolio manager first analyzes a variety of asset mixes to determine an optimal portfolio and then adjusts the mix by monitoring and rebalancing. What is the name for the process the portfolio manager is following?
Rashad is a Dealing Representative with Investors Network Corp., a mutual fund dealer. Investors Network is registered in all provinces and territories of Canada and Rashad is registered in the Edmonton,
Alberta branch. Rashad is told to provide his Branch Manager with a number of client files. The client files will be part of a compliance review by the applicable self-regulatory organization (SRO). Which
regulator will review Rashad's client files?
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?
One of your clients, Harry, has heard that he can defer paying tax on capital gains. He wants to know if what he has heard is correct and if so, how to defer paying taxes on capital gains.
What would you tell Harry?
Pierre buys a call option on a stock. What is the implication of this transaction?
Winter is a Dealing Representative with Top Tier Investing, a mutual fund dealer and member of the Mutual Fund Dealers Association of Canada (MFDA). Which of the following statements about Winter's
suitability obligation is CORRECT?
Winter is required to make a suitability determination every time:
i) she makes a recommendation to a client
ii) a client's investment returns decline.
iii) she opens a new client account
iv) the markets fluctuate.
A self-directed investor bases stock purchase decisions on internet recommendations and stock tips, believing this provides the most accurate information. What is the investor's behavioural bias?
What is the securities administrator’s power that is intended to ensure investors can make fully informed investment decisions?
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?
What statement CORRECTLY describes a key difference between bonds and debentures?
Jehona is a Dealing Representative with Vista Wealth Investments Inc., a mutual fund dealer in Ontario and Nova Scotia. Jehona has reviewed her client Sokol’s account and wants to adjust the holdings and re-balance the portfolio. Which of the following statements about Jehona’s permitted activities is CORRECT?
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?
Max, a financial advisor, has invited his client, Natalia, for an annual review of her retirement plan. However, Natalia does not want to come for a meeting, as she is comfortable with her current portfolio asset allocation and does not think that a review is required at this point. What bias is Natalia demonstrating?
Julia invested in ERF energy mutual fund three years ago. At that time, the price of the fund was $25.44 per unit. Over time, the unit price has dropped to $19.72, however Julia does not want to consider selling her investment until it returns to $25.44. What bias is she demonstrating?
Dale will be using his mutual fund portfolio to supplement his income from other sources. He is comfortable with variable payouts and fluctuating markets. What is the best solution for Dale?
What is the first step before becoming eligible for registration as a mutual fund dealing representative?
Sharon short-sold 7,500 shares of LMP at $85. She later buys back the short position at $95. Sharon was charged a 1% commission on the proceeds for both the short sale and buyback transactions. What is Sharon's profit or loss?
Tony, the investment manager of True North Canadian Equity Fund is deciding on some new investments. He has done an economic analysis of the various provinces and sectors of the Canadian economy and has determined that Nova Scotia and Alberta present the best prospects. He has also identified potential in the oil and gas sector. He narrows down his selection to an oil supply firm in Medicine Hat and a drilling company in Halifax.
What investment approach is Tony employing?
You ask a new client, Brad, "what are your financial obligations and what are your assets?" What information are you trying to gather in order to comply with the know your client (KYC) rule?
Your client earns $100,000 from employment and $10,000 from investments each year. Her bills total $95,000 annually. What is her discretionary income?
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?
Your client, a high-income earner in a high marginal tax bracket, is seeking to minimize the amount of tax he pays on investment income while continuing to invest in mutual funds. Which mutual fund would best meet his investment objective?
TESTED 14 Jan 2026
