Investment Funds in Canada (IFC) Exam
Last Update Nov 30, 2025
Total Questions : 447
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Which type of mutual fund is best suited to a client who is averse to volatility?
Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?
What amount of Canadian taxes would an investor with a 33% marginal tax rate pay on a $5,000 dividend payment from a foreign corporation?
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?
Which financial leverage ratio measures a company’s ability to repay its borrowings?
What is the time period during which an individual must complete a training program once she starts acting as a dealing representative?
When calculating an individual's annual RRSP contribution limit, what adjustments can be made to the base calculation?
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?
An investor owns equity mutual funds and is concerned about overall fund expenses. She prefers investment options that have lower management expense ratios, along with the opportunity for higher returns. What is the most appropriate fund type for this investor?
Fernanda, an advisor, is setting up her process for completing client suitability assessments. What must Fernanda do with respect to investment suitability?a
An established securities house in Quebec offers several investment products, including mutual funds and various securities (e.g., bonds and stocks). An administrative employee has brought forward a potential fund trading violation by a registered employee. Immediately following the employee's report what action is most likely to occur?
A mutual fund sales representative is under pressure to meet certain sales objectives. However, he consistently ignores these quotas when making client recommendations. Which standard of conduct has he followed?
What risk type is prevalent regardless of the level of portfolio diversification or hedging?
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?
Which of the following money market securities have the highest degree of risk for the investor?
Which index would investors use as a benchmark for doing research on the largest listed public companies in the US marketplace?
Which of the following characteristics about mortgage mutual funds is CORRECT?
The Mutual Fund Dealers Association of Canada (MFDA) has strict rules concerning conflicts of interest. Which of the following is TRUE?
Jack and Jill hold a mutual fund account as tenants in common. What conditions would apply to their account?
Should either die, full ownership of the account would pass to the other
Each would be the owner of 50% of the account’s assets
Either could issue trading instructions on all account assets
Each would be required to provide KYC information
Gary chooses not to recommend that his client sell a current mutual fund to purchase a similar new mutual fund despite pressure to meet a sales target for the new fund. What responsibility applies to Gary’s action?
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?
You are comparing the performance of ABC Equity Fund and XYZ Equity Fund to their benchmark. Indicate the correct statement.
Return | Year 1 | Year 2 | Year 3 | 3 Year Compound Return
Benchmark | -2.0% | 12.6% | 20.6% | 10.0%
ABC Equity Fund | -10.0% | 16.0% | 24.0% | 9.0%
XYZ Equity Fund | 8.0% | 9.0% | 10.0% | 9.0%
In what circumstance would an investor receive a T3 or T5 reporting a capital gain from a mutual fund investment?
Barend is a Dealing Representative with Planvest Group Inc., a mutual fund dealer and member of the Mutual Fund Dealers Association of Canada (MFDA). Which of the following CORRECTLY describes
Barend's obligation for conflicts of interest?
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?
The following information is available for Monique:
Number of children
1
Lifetime RESP contributions to date
$45,000
CESG received to date
$7,200
Family income
$120,000
Desired current year contribution
$7,000
What is the maximum RESP contribution that Monique can make this year?
Which of the following qualifies as personal information under the Personal Information Protection and Electronic Documents Act (PIPEDA)?
Which statement best describes key differences between dividend funds and standard equity funds?
What stage in the business cycle typically has increasing wages, rising inflation, rising interest rates with slowing sales, and decreasing business investment?
Which document contains information regarding the Independent Review Committee compensation?
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?
What term describes the range of possible future outcomes on the price of a security?
Which exchange in Canada deals exclusively with financial and equity futures and options?
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
Using historical market data, which investment strategy's purchasing power is least susceptible to inflation risk?
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?
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?
When selecting an investment to add to a portfolio, what feature would reduce the overall risk?
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?
Felipe is a Dealing Representative who is developing a non-registered investment solution for Laryssa. Felipe is debating between recommending either mutual fund trusts or mutual fund corporations. He wants to recommend an investment that reduces Laryssa's exposure to taxation.
Which feature may influence his recommendation?
As a measurement of risk, which of the following statements about beta is TRUE?
Sarah and Kyle are a married couple. They are both 34 years of age and work as teachers. Their combined annual income is $130,000. They are able to save $800 each month. They own a home worth
$340,000 with a $120,000 mortgage. Since they work for the same employer, they have the same defined benefit pension plan. Other than a tax-free savings account (TFSA) in Kyle's name with $5,000, they do not have any other assets.
They are avid sailors and want to save towards a purchase of a sailboat. For the type of sailboat they want, they estimate it should cost around $65,000. They want you to recommend an investment for their monthly savings to help them achieve their goal faster.
What question should you ask them next?
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?
Evan owns retractable preferred shares of Ingram Corp. Which statement CORRECTLY describes a key feature of Evan's shares?
Dakota is a Dealing Representative with Harvest Wealth Inc., a mutual fund dealer. Dakota starts a marketing campaign to contact prospective new clients and increase sales with existing clients. Which of the following CORRECTLY describes activities that Dakota can engage in under her marketing campaign?
What program requires pensioners to reside in Canada for a specific period of time?
Which form of investment income is taxed at an investor’s marginal tax rate?
Which option is most appropriate for investors who prefer growth-oriented mutual fund trusts?
What type of investment account has the option to open it with rights of survivorship?
Maureen is 65 years old and will be retiring soon. She has a modest portfolio of mutual funds that focus on growth. As she approaches retirement, Maureen wants to switch to investments that provide steady income with low to medium risk.
Given Maureen’s wishes, which of the following mutual funds would be suitable for her?
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?
Which of the following is included when calculating a country's gross domestic product (GDP)?
Derek submits an order to sell 300 units of the Evergreen Canadian Mortgage Fund at 8:00 p.m. EST on Friday, January 6. His proceeds will be based on the net asset value per unit (NAVPU) for which day (assume no holidays)?
Cristina wants to add a mutual fund to her portfolio offering dividend income. She is considering either a preferred dividend fund or a standard equity fund. What is an important difference for Cristina to consider when comparing these two types of funds?
What personal information must be obtained from clients opening a non-registered account?
Date of birth
Social insurance number
Permanent address
Full legal name
Beatrice is looking for comprehensive information regarding the analysis of financial statements and fund management expenses as it relates to her current mutual fund investment.
Which document would provide the information she is looking for?
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.
Karen works Monday to Wednesday for a member of the MFDA as a dealing representative and Thursday and Friday as a language instructor at a local college. Client orders received on Thursdays and Fridays are held until Karen returns to work the following week. What condition of dual employment is violated under these circumstances?
When reviewing a company's balance sheets, what ratio best determines whether their borrowing is excessive?
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?
A risk-averse investor is meeting with their advisor to discuss investment solutions. Traditionally, the investor has considered GICs only, but they are open to considering other alternatives. To what emotional bias is the investor most susceptible?
Based on the financial planning pyramid, what security would be appropriate for a very aggressive investor?
While assessing the suitability of an investment recommendation as a Dealing Representative, which statement applies to the "Client's Interest First" standard?
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?
Jacinta is a Dealing Representative with WealthSource Partners Inc., a mutual fund dealer registered in Ontario. Jacinta meets with her friend Saabir, who is a licensed insurance agent. Saabir asks Jacinta for
a list of Jacinta's clients so that Saabir can reach out to them to ensure that their insurance needs are being met. Which of the following statements about Jacinta sharing the list with Saabir is CORRECT?
What type of managed fund, recently introduced to Canada, is allowed greater use of short sales, leverage, and derivatives compared to mutual funds, but not to the same extent as hedge funds?
When comparing mutual funds, what information would help a Dealing Representative determine a suitable mutual fund for a client?
An investor deposits $80,000 in a 10-year, segregated fund contract worth $50,000 at maturity; assuming the contract guarantee is set at 75%, how much will the investor be paid (maturity guarantee)?
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?
Tristan is evaluating different mutual fund options for his client. What mutual fund option would be the most expensive to buy in dollar terms?
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?
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?
What type of asset allocation strategy rebalances asset classes to pre-defined corridors?
A fund manager who utilizes an interest rate anticipation philosophy forecasts a rise in interest rates. What change in asset allocation should he implement?
Jeremy is reviewing the prospectus of a Canadian equity fund and notes the fund permits the use of derivatives. The stated objective of the derivative use is bet on the future movement of the market to increase the fund's returns. What should Jeremy be aware of regarding this fund?
Which financial target would usually indicate a medium-term goal for a 35-year-old?
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?
Which newspaper article would be likely to result in foreign capital moving out of a country?
What is Widget Inc.’s gross profit?
Widget Inc. Earnings Statement
Sales: $200,000
Cost of Goods Sold: $80,000
Selling & General Expenses: $40,000
Depreciation: $5,000
Total Expenses: $30,000
Net Earnings: $40,000
Which money market fund yield is calculated as the most recent seven-day yield?
Ayra believes the Canadian economy will be booming for the next five years. Which mutual fund can provide Ayra with the most tax efficiency if she keeps her investment in a non-registered account?
Which drawback of the comparison universe method makes average fund managers look more like underperformers as the comparison period lengthens?
Josephine is a Dealing Representative with Sunshine Mutual Funds Inc. for over 10 years. Her brother Jonathan has an account with Sunshine Mutual Funds Inc., too. Jonathan wants Josephine to manage his
portfolio and make investment decisions on his behalf. Jonathan trusts his sister to make better investment choices than he can. He also wants to give Power of Attorney (POA) to Josephine so she can have full authority over his account.
How can Josephine respond to her brother's request?
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)?
What party is responsible for ensuring that a public corporation's total number of outstanding common shares does not exceed its total number of authorized shares?
Michael had invested in several mutual funds, most of which have appreciated in value. He is not sure if he needs to report the gain as capital gains when he files his income tax return.
What would you tell Michael?
Why is it important to include ethical decision-making as a Standard of Conduct?
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?
What is a key difference between marketable government bonds and treasury bills?
A mutual fund representative meets with a young family whose net worth/level of wealth is categorized as low, but they have the potential to become wealthy. In general, the family seems susceptible to believing that market events are predictable. Also, the family has a stronger impulse to avoid losses than earn gains. How might the mutual fund representative effectively address each of the two biases, respectively?
A mutual fund has the following investment objective: "This Fund invests in a diverse portfolio of equity securities that are judged to have fundamental growth opportunities." What is this type of mutual fund?
In conjunction with investment objectives, what Know Your Client information is essential to allow an advisor to fulfill suitability assessment obligations?
Sonya, a mutual fund manager for Drake Financial, has had a stellar year in managing their Canadian equity portfolio and has outperformed the benchmark by over 200 basis points. She is now concerned that within the last couple of months of this calendar year, the Canadian equity market is due for a 10 to 15% pullback. Which investment strategy would be most appropriate for her to implement for the last couple of months of the year to offset the market correction?
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?
Greg, one of your clients, has been advised by a friend to invest in open-end mutual funds. He is not sure about the differences between open and closed-end funds.
What would you tell Greg about open-end funds?
Which of the following statements about registered education savings plans (RESPs) is CORRECT?
What can a capital loss be applied against when computing Canadian income taxes?
Which investment securities will change value depending on the price change in the underlying assets?
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)?
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?
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?
The Corporation Group is seeking financing for the purchase of new equipment for a planned expansion. They want to use the funds for a period of five years. They do not want to pledge any of their existing assets as security or extend shares to any of their debtors. Additionally, they want the privilege of repaying borrowed funds at any time if they so choose. What is the most ideal fixed-income security they should issue to raise this capital?
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?
In a mutual fund dealer, who is the person responsible for establishing and maintaining compliance policies and procedures as well as monitoring and assessing compliance?
What type of shares offer its shareholders the opportunity to receive additional dividends if the company’s profit exceeds a stated level?
Yesterday, Mariana purchased mutual funds for the first time from Diablo, who is a Dealing Representative for Horizon Financial. When Mariana mentions to her friend Marcus that she just started to invest, Marcus confides that he experienced losses from mutual fund investing. Her initial feelings of excitement have now changed to worry and regret. She wished she had talked to her friend before investing and wonders if she can change her mind.
Which statement regarding the right of withdrawal applies?
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?
Thomas, a resident of Ontario, is a full-time university student. He does food delivery to supplement his income. During the school year, he works on weekends and works full-time during his summer break.
Thomas' pensionable earnings were $16,000 for the year. How much must Thomas contribute to CPP when CPP contribution rate is 5.95%?
What is the first step before becoming eligible for registration as a mutual fund dealing representative?
What equity investment philosophy places greater emphasis on industry weighting than on security selection?
What is the step in the financial planning process that includes a discussion of a client’s household budget?
Danica is looking for a mutual fund to hold in her non-registered account that provides a regular stream of income with potential for capital growth. She is having difficulty distinguishing between bond funds and dividend funds. Which of the following statements is TRUE?
Throughout the year, the Redwood Global Equity Fund generated the following outcomes:
. $1.00 per unit of interest income from Canadian treasury bills
. $2.50 per unit of dividend income from foreign corporations
. $7.75 per unit of capital gains from the sale of Canadian corporations
. $6.50 per unit of capital gains from the sale of foreign corporations
. $2.00 per unit of capital losses from the sale of foreign corporations
Given that the Redwood Global Equity Fund is structured as a mutual fund trust, which of the following statements is true?
A mutual fund sales representative is asked to make a presentation to an investment club. During the presentation, he discusses personal experiences of a questionable nature. What aspect of Professionalism is relevant to this situation?
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?
Nancy received a $160 taxable dividend from Can-Star Ltd., whose shares she holds in her non-registered account. Can-Star is a taxable Canadian corporation. What is the approximate amount of the dividend tax credit Nancy will receive on the shares?
In which of the following situations would the client mobility exemption apply?
What information can be found from a simplified prospectus instead of Fund Facts?
An investor who wants to deplete their funds within the next five years is considering various withdrawal plans. Assuming the investor is less concerned about predictable annual cash flows, what withdrawal plan type is most appropriate for the investor?
TESTED 30 Nov 2025
