Investment Funds in Canada (IFC) Exam
Last Update Sep 20, 2026
Total Questions : 537
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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)?
Who is responsible for issuing an annual report that describes each instance where the recommendation with regard to a conflict of interest has not been followed?
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?
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?
Matthew is planning on making the following investments in December:
Assuming all four investments have performed well throughout the year, which investment will trigger the highest unexpected taxes?
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?
Martine is working with Ishmail, her financial advisor, to develop her client investor profile. In her overall risk profiling, it was determined that Martine could tolerate an asset allocation of up to 70% of her portfolio. She currently has a goal of saving for a down payment for her first home, saving for her young children ' s education and retirement. Ishmail uses a one-fund strategy for all his client accounts - Martine would be allocated the " growth " fund to all her investments and savings under his management. What should be Martine ' s most significant risk in using this strategy at this stage?
Which of the following actions by the federal government or the Bank of Canada is an example of monetary policy?
The fund manager for the VT Canadian Equity Fund looks for stocks that are out of favour and trading for less than their intrinsic value. What equity investing philosophy is the fund manager following?
A 3-year, 3.25% coupon-paying bond sells for $95.72 (interest is paid semi-annually). Assuming the par value is $100, what is the yield to maturity of this bond (using the approximation formula and rounded to two decimal places)?
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?
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
Douglas, aged 73, won a lottery prize of $100,000 last week. Today he contacted Vincent, his Dealing Representative, with instructions to contribute the winnings to his registered retirement income fund (RRIF) account.
Which of the following statement about RRIF is CORRECT?
When can a mutual fund sales representative disclose confidential client information without informing the client?
A husband wishes to transfer some of his non-registered mutual fund holdings to his wife, but wants to maintain trading authority over the transferred assets. He also wishes to ensure that should she die, the gift he is making will revert to him. What is the appropriate account type?
Recently interest rates have gone up. Your customer, Mr. Corelli, has asked you how this will affect the value of his mortgage fund. What is the best response to give to Mr. Corelli?
A parent wants to put aside savings for his 20-year-old disabled daughter to use at age 65. He prefers funds that require minimal management, while maximizing potential returns during earlier years. Which type of fund is most appropriate, given this parent ' s objectives?
Clinton is meeting with his advisor Zaydin to discuss the best ways to regularly invest from his paydays. Clinton is concerned that he may be unable to commit to regular contributions versus lump-sum deposits. Why would Zaydin recommend an accumulation plan to his client?
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?
Your client, Rinaldo, wants to know more about the fees associated with his mutual funds. What can you tell him about a mutual fund’s management expense ratio (MER)?
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?
What type of fee does a mutual fund sponsor often reduce the longer an investor holds a back-end load fund?
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?
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?
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?
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?
In what decade did the chartered banks make an aggressive entry into the mutual fund market?
The ZZZ Money Market Fund has a 7-day yield of 0.05%. What is the current yield for the fund? Round your answer to two decimal places.
Charlotte has received proceeds from a deceased family member’s estate. Charlotte decides to visit Malik, who’s a Dealing Representative at her bank. She tells Malik, she does not know much about trading ETFs, but she wants to invest in ETFs. Charlotte says she feels fortunate to have this money and that she’s not worried about losing it because she never planned on having any of it.
What element of the Know Your Client (KYC) information has Malik been able to learn?
How does the life-cycle hypothesis assist an advisor while interacting with clients?
A fund manager who utilizes an interest rate anticipation philosophy forecasts a rise in interest rates. What change in asset allocation should he implement?
Samantha will be retiring from her full-time job when she turns 60 and would like to use her non-registered investment plan as income until she is eligible to receive her full pension benefit at age 65. What systematic withdrawal plan should she choose?
In which province must registered dealing representatives notify their securities administrator of a personal bankruptcy ?
What is the securities administrator’s power that is intended to ensure investors can make fully informed investment decisions?
When reviewing a company ' s balance sheets, what ratio best determines whether their borrowing is excessive?
A client has $950,000 in his RRSP account and $550,000 in his non-registered account held in nominee name with Tradewell Mutual Funds.
In the event of his dealer, Tradewell Mutual Funds declaring insolvency, what is the total amount the client be eligible to receive from the Mutual Fund Dealers Association of Canada Investor Protection Corporation (IPC)?
Based on your discussions with your client Sierra, you believe an asset allocation of 30% fixed income and 70% equities will help her achieve her long-term goals. What type of asset allocation strategy are you implementing?
Which option is most appropriate for investors who prefer growth-oriented mutual fund trusts?
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?
Jonathan is a Dealing Representative who has just finished an appointment with his new client, Shirley. Jonathan has concluded that Shirley has a low-risk profile but wants to establish additional savings of $500,000. During their discussion, Shirley emphasizes she wants investments that are also tax efficient. Jonathan learned that currently Shirley has no registered retirement savings plan (RRSP) and tax-free savings account (TFSA) contribution room due to using those opportunities by investmenting elsewhere.
What variable is a PRIMARY consideration for Jonathan when making an investment recommendation?
Which money market fund yield is calculated as the most recent seven-day yield?
Aside from the client ' s advisor, who else is responsible for performing a suitability assessment for a client ' s investments?
An investor seeks an equity investment that will mirror the performance of the energy sector in Canada. She desires a low-cost, flexible alternative that can quickly be bought or sold. Which product is most suited to her needs?
In what circumstance would an investor receive a T3 or T5 reporting a capital gain from a mutual fund investment?
At the beginning of the year, Krystal purchases shares in DEF Company for $50 a share and receives $2.50 in dividends. She sells her DEF shares at the end of the year for $49 a share. What is Krystal ' s one-year rate of return on her DEF shares?
Seth ' s brother Keith manages a successful private equity fund. Seth is an investment advisor and has thoroughly evaluated Keith ' s fund. He believes it would be an excellent investment for some of his clients. If Seth does not disclose his relation to Keith prior to recommending this investment, what value does he stand to breach with his client?
The following chart outlines data for various fund managers:
Which manager likely has the highest return for a given level of risk?
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?
What couple profile would likely be in the mature earning years stage of the life cycle?
Malik has been saving money for retirement but he is worried about the impact inflation may have on the value of his savings. He wants to purchase a bond that will give him a steady stream of income that is greater than the inflation rate. He has found a bond issued by a major airline with a market price of $9,200, a par value of $10,000, and a coupon rate of 6.75%. What is the current yield of this bond?
Over the course of a couple of weeks and several appointments, Harold was finally able to provide an investment solution for his new client, Felicia. It was a lump sum investment where they plan to see her
money grow for the next 5 years.
With regards to Know Your Client (KYC) requirements, what are Harold ' s responsibilities moving forward?
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?
Yesterday, Mariana who is new to investing and purchased mutual funds for the very first time. She shared her excitement with her good friend, Julius. However, after Julius learned about her investment, he admits that he had a bad experience with mutual fund investing and that he lost money. Mariana regrets not talking to Julius prior to making her decision. Her feelings of enthusiasm have changed to fear. She is wondering if it is too late to change her mind and cancel her purchase order.
Which statement regarding the right of withdrawal 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?
At 4:00 p.m. Eastern Time on July 6, the following information is collected for the Marigold Canadian Dividend Fund:
What is the net asset value per unit NAVPU for the Marigold Canadian Dividend Fund for July 6?
What is the level of risk associated with a mortgage fund compared to other types of funds?
What role do investment dealers play in the Canadian and global financial markets?
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?
A sales representative has accepted an instruction from a relatively new client to liquidate all positions and wire the proceeds. This request appears rather unusual and suspicious, so she escalates this to her compliance department. To whom should the compliance department report these transactions?
What does relative performance seek to compare between a fund and the other funds in its category?
Which statement best describes what a rational investor will do when comparing the risk and return of two investments?
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?
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)?
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?
Sven owns preferred shares that give him the option to sell his holdings back to the issuing company at a predetermined price and within a specified time. What type of preferred shares does Sven own?
An unlicensed person was hired at a securities administrator, and they accepted their first case, which may result in suspending a registrant ' s license. The new hire immediately requests a subpoena of witnesses (and evidence) and requests guidance from the FATF. What error did the new hire likely commit?
Quintin has been a Dealing Representative for Global Maximum Financial for 5 years. Today, he opened an account for his new client, Reginald. In addition to opening a new account, Reginald agreed to
accept Quintin ' s investment recommendation and placed a purchase order to buy units of the Global Maximum Value Equity fund.
Quintin informed his Branch Manager Lupita about this new account on the same day the purchase order was received. Lupita told Quintin that she would complete her review of the New Client Application Form (NCAF) by no later than tomorrow.
Which statement regarding this new account opening is CORRECT?
Your client Charlie is thinking about making a large investment into the Sentinel Canadian Equity Fund on December 15. The ex-dividend date for the mutual fund is December 20. What advice would you give
Charlie to avoid the tax trap?
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?
Your client has very limited investment knowledge and is confused about what is meant by " marginal tax rate " . What do you tell him?
Which of the following money market securities have the highest degree of risk for the investor?
Your client Gerard is 30 years old and plans to retire at age 65. He has a mutual fund portfolio of $40,000 in which he invests $1,500 monthly. Gerard ' s objective is to use these funds to meet the 20% down payment requirement to buy a house for $650,000.
What is Gerard ' s investment time horizon not considering market fluctuations?
What percentage are specialty funds in a portfolio with $84,000 in a Canadian Equity Fund, $22,000 in a Global Bond Fund, $10,000 in a Green Energy Fund, and $4,000 in a Crystal Resource Fund?
An investor purchases units of an equity fund for $17.60. In which of the following circumstances would an investor potentially owe taxes on capital gains?
What may be used to determine which of two bond portfolios is more sensitive to interest rate changes?
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?
What criteria is used to compare equity mutual funds and global bond funds to determine suitability?
What type of mutual fund can invest in specified derivatives and forward contracts for grains, meats, metals, energy products, and coffee?
The portfolio manager of the High Income Fund has 90% of the mutual fund invested in bonds. What is a reason for holding bonds in a mutual fund portfolio?
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?
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.
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?
In which of the following situations would the client mobility exemption apply?
Which statement regarding the underwriting process and over-the-counter (OTC) markets is CORRECT?
A portfolio that incurs a substantial loss due to a significant downturn in Canadian equities has been exposed to what type of risk?
Karen’s know your client (KYC) profile corresponds to someone who has a long time horizon, is comfortable with risk and volatility, and is primarily interested in growth. She watches the daily movements of the Toronto Stock Exchange (TSX) and wants a mutual fund that will closely match what she sees.
What kind of mutual fund would be BEST for her?
David is reviewing a simplified prospectus and is particularly interested in one of the funds. The investment objective stated for this fund is to provide dividend income, capital preservation, and some potential for capital gains. What fund is David interested in?
When comparing the current yield and yield-to-maturity of a bond, which statement applies?
In a mutual fund sales representative ' s interaction with clients, what term best describes a set of moral principles that incorporate both the letter of the law and the spirit of the law?
Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?
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?
What do Guaranteed Income Supplement (GIS) and Allowance for the Survivor have in common?
A portfolio manager of a bond fund who believes interest rates will fall should do what?
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?
What is often a requirement of maintaining licensing as a mutual fund sales representative?
Rank the decisions made by a portfolio manager in order of importance for the success of the portfolio.
What is the first step before becoming eligible for registration as a mutual fund dealing representative?
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?
What is the national self-regulatory organization (SRO) for investment dealers?
Using historical market data, which investment strategy ' s purchasing power is least susceptible to inflation risk?
What decision accounts for most of the success or failure of a portfolio?
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?
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%?
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?
Anthony purchased 500 units of XYZ Fund at a price of $12.00 per unit. Near the end of the year, the mutual fund made a distribution of $1.50 per unit. The net asset value per unit (NAVPU) immediately before the distribution was $16.50. Anthony immediately reinvested his distribution at the new NAVPU. How many new units did Anthony purchase when his distribution was reinvested?
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?
What focus within the Standard of Conduct addresses unsolicited client orders ?
When opening a new non-registered account, which client information is optional?
As per CIRO policy, what is a required step after receiving an emailed client complaint regarding dissatisfaction with a product?
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?
A client had set up a voluntary accumulation plan to invest a set amount annually in December in an equity mutual fund. They decided to move to a pre-authorized plan where they will invest a smaller amount in this fund every week. What is likely the most significant benefit of this change?
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?
Why is it important to include ethical decision-making as a Standard of Conduct?
Which of the following individuals would qualify for a full or partial Old Age Security (OAS) pension?
Which of the following CORRECTLY describes a material conflict of interest that has been properly addressed by the Dealing Representative?
What is a general observation of the Canadian mutual fund industry ' s evolution?
What is the step in the financial planning process that includes a discussion of a client’s household budget?
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?
How might a registrant provide beneficial mutual fund advice and service?
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?
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?
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?
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?
Which of the following statement about Exchange Traded Funds (ETFs) is TRUE?
What purpose does it serve for non-money market mutual funds to hold money market instruments?
What type of fixed-income fund would have the most tax-advantaged form of income distribution?
David had $10,000 in his investment account with Dynamic Investments, a mutual funds dealer. On June 28, David wants to buy 500 units in ABC Canadian Dividend Fund that has a Net Asset Value Per Unit (NAVPU) of $14.10. His friend Robert suggests that he may get a better price if he used the strategy of dollar-cost averaging. David then instructs his Dealing Representative to place a purchase order for 100 units on the first of every month starting July 1st for the next 5 months.
The orders are executed at the following NAVPUs.
July 01, $14.00
Aug. 01, $14.50
Sep. 01, $15.00
Oct. 01, $14.25
Nov. 01, $16.50
Did David get a better purchase price following the dollar-cost averaging strategy compared to making a lump-sum purchase of 500 shares on Jun 28, 20xx?
Greg is a Dealing Representative. As a part of his business building activity, Greg prepares several messages to post on his website and Facebook page. Which statement CORRECTLY describes this
situation?
Which statement about a net capital loss incurred by a mutual fund trust is CORRECT?
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 is TRUE about the movement of business cycles in the Canadian economy?
Megan purchases a treasury bill for $98,200. When it matures for $100,000, how does Megan treat the $1,800 difference?
Iliana owns 1,000 participating preferred shares in the First Canadian Bank. Which of the following features are characteristic of her investment?
Which statement CORRECTLY describes index mutual funds and traditional exchange-traded funds (ETFs)?
After completing the proficiency examinations, how long can an individual remain unregistered without having to rewrite these examinations?
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)?
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?
TESTED 20 Sep 2026
