IFC 시험 - CSI실제시험문제와 답 - 447문항

Question No : 1

Which of the following is a rationale for a portfolio manager to use a passive portfolio management strategy?

A.The manager does not believe in using benchmarks.
B.The manager wishes to create capital gains in the mutual fund by frequently buying and selling stocks
C.The manager believes he or she can outperform the market with his or her stock picking skills.
D.The manager believes that as the markets are fairly priced, it would be futile to look for mis-priced securities.

정답:
Explanation:
D is correct because a passive portfolio management strategy is based on the assumption that the markets are efficient and that it is impossible or very difficult to consistently find mis-priced securities that can generate abnormal returns. A passive portfolio manager aims to replicate the performance of a market index or benchmark by holding a diversified portfolio of securities that mirrors the index or benchmark. A passive portfolio manager does not believe in using active strategies such as market timing, security selection, or sector rotation. The manager does not need to use benchmarks (A), as they are essential for measuring and evaluating the performance of a passive portfolio. The manager does not wish to create capital gains in the mutual fund by frequently buying and selling stocks (B), as this would incur higher transaction costs and taxes, and deviate from the index or benchmark. The manager does not believe he or she can outperform the market with his or her stock picking skills ©, as this would imply an active portfolio management strategy.
Reference: Investment Funds in Canada (IFC) | Canadian Securities Institute

Question No : 2

Which of the following characteristics about mortgage mutual funds is CORRECT?

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

정답:
Explanation:
A is correct because mortgage mutual funds typically pay monthly distributions of interest to their investors, as they invest in mortgages that generate regular interest income. If interest rates fall, the mutual fund’s net asset value per unit (NAVPU) will increase (B), not decline, as the value of the existing mortgages in the fund will rise. Mortgage mutual funds are suitable for low to moderate risk investors ©, not only for high risk investors, as they provide stable income and capital preservation. Mortgage mutual funds are not risk-free (D), even if the mortgages are National Housing Act (NHA) insured, as they still face credit risk, interest rate risk, and liquidity risk.

Question No : 3

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?

A.retractable
B.participating
C.convertible
D.redeemable

정답:
Explanation:
A is correct because retractable preferred shares are a type of preferred shares that give the holder the option to sell the shares back to the issuer at a predetermined price and within a specified time. This feature provides the holder with more flexibility and protection against interest rate fluctuations. Participating preferred shares (B) are a type of preferred shares that give the holder the right to receive additional dividends if the issuer’s earnings exceed a certain level. Convertible preferred shares © are a type of preferred shares that give the holder the option to convert the shares into common shares of the issuer at a predetermined ratio and price. Redeemable preferred shares (D) are a type of preferred shares that give the issuer the option to buy back the shares from the holder at a predetermined price and within a specified time.

Question No : 4

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.

A.$37,888
B.$36,698
C.$42,861
D.$35,859

정답:
Explanation:
A is correct because Francis will receive $37,888 in Canadian dollars when he redeems the Funds. This is calculated by dividing the current proceeds from the redemption in US dollars by the current CAD/USD exchange rate and rounding to the nearest dollar. That is,

Question No : 5

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

A.Comparing historical rates of return between different types of mutual funds.
B.Assessing historical differences in the rate of return per unit of risk of similar mutual funds.
C.Referencing the fund code for each mutual fund that is being compared.
D.The rights a client has if there is a desire to cancel the purchased mutual fund.

정답:
Explanation:
B is correct because assessing historical differences in the rate of return per unit of risk of similar mutual funds helps a Dealing Representative to compare the performance and risk-adjusted returns of different mutual funds and select the most suitable one for a client’s risk tolerance and investment objectives. Comparing historical rates of return between different types of mutual funds (A) does not account for the risk involved in each type of fund. Referencing the fund code for each mutual fund that is being compared © does not provide any information about the fund’s characteristics, features, or suitability. The rights a client has if there is a desire to cancel the purchased mutual fund (D) are not relevant for determining a suitable mutual fund for a client.

Question No : 6

What type of mutual fund can invest in specified derivatives and forward contracts for grains, meats, metals, energy products, and coffee?

A.global equity fund
B.commodity pool
C.labour-sponsored investment fund
D.specialty fund

정답:
Explanation:
A commodity pool is a type of mutual fund that can invest in specified derivatives and forward contracts for commodities, such as grains, meats, metals, energy products, and coffee. A commodity pool allows investors to gain exposure to the commodity markets without having to buy or sell the physical commodities themselves. A commodity pool may also use leverage and hedging strategies to enhance returns and reduce risks.
Therefore, B is the correct answer.
Reference: Commodity Pool: Definition and How It Works - Investopedia, Canadian Investment Funds Course (CIFC) | IFSE Institute

Question No : 7

Quinton, a Dealing Representative, meets with his client Banji. Banji’s Know Your Client (KYC) indicates that her risk profile is “medium’’. Banji currently has $35,000 in her account which is invested 50% in the Middleton Balanced Fund and 50% in the Hector Growth Fund. She tells Quinton that she would like to contribute an additional $10,000 to purchase the Prospect Labour-Sponsored Fund.
Which of the following statements about Banji’s proposed transaction is CORRECT?

A.Quinton can proceed with the purchase of the Prospect Labour-Sponsored Fund because it is suitable for Banji based on her current KY
B.Quinton should update Banji's risk profile to "high" so that he can proceed with the purchase of the Prospect Labour-Sponsored Fund.
C.Quinton should not proceed with the purchase of the Prospect Labour-Sponsored Fund because it is not suitable for Banji based on her current KY
D.Quinton must provide Banji with full disclosure about the risks so that he can proceed with the purchase of the Prospect Labour-Sponsored Fund.

정답:
Explanation:
A labour-sponsored investment fund (LSIF) is a type of mutual fund that invests in small and medium-sized businesses that are not publicly traded. LSIFs are sponsored by labour unions or associations and offer tax credits to investors. However, LSIFs are also very risky and illiquid investments that may not be suitable for investors with a medium risk profile, such as Banji.
Therefore, Quinton should not proceed with the purchase of the Prospect Labour-Sponsored Fund because it is not suitable for Banji based on her current KYC.
Therefore, C is the correct answer.
Reference: Labour-Sponsored Investment Funds (LSIFs): Definition and How They Work - Investopedia, Canadian Investment Funds Course (CIFC) | IFSE Institute

Question No : 8

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?

A.She will pay taxes on 50% of the distribution.
B.She will pay taxes at her top marginal tax rate.
C.She will pay taxes on the grossed-up amount of the income.
D.She will pay taxes at her average tax rate.

정답:
Explanation:
Interest income distribution is a type of income that a mutual fund pays to its investors from the interest earned on its fixed-income investments, such as bonds and mortgages. Interest income distribution is taxed as ordinary income at the investor’s top marginal tax rate, which is the highest tax rate that applies to their income bracket.
Therefore, B is the correct answer.
Reference: Interest Income and Taxes - Fidelity, Topic No. 403, Interest Received | Internal Revenue Service

Question No : 9

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?

A.David got his 500 units at the same price as the lump sum price he would have paid.
B.David got his 500 units at a lower price than the lump sum price he would have paid.
C.David realizes that Dollar cost averaging is the best strategy for getting lower prices.
D.David got his 500 units at a higher price than the lump sum price he would have paid

정답:
Explanation:
Dollar-cost averaging is a strategy that involves investing equal amounts of money at regular intervals, regardless of the price of the security. By using dollar-cost averaging, investors may lower their average cost per share and reduce the impact of volatility on their portfolios. However, this strategy does not guarantee a better purchase price than making a lump-sum purchase. In this case, David got his 500 units at a higher price than the lump sum price he would have paid. His average cost per unit was $14.65, while the lump sum price was $14.10.
Therefore, D is the correct answer.
Reference: What Is Dollar-Cost Averaging?, What Is Dollar Cost Averaging?, Dollar-Cost Averaging: Definition and Examples

Question No : 10

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

A.You have the right to sell a set number of shares at a set price.
B.You have the right to purchase a set number of shares at a set price.
C.You have the obligation to sell a set number of shares at a set price.
D.You have the obligation to buy a set number of shares at a set price.

정답:
Explanation:
A put option is a contract that gives the buyer the right, but not the obligation, to sell a set number of shares of an underlying asset at a set price within a specified time frame. The buyer of a put option expects the price of the underlying asset to fall below the strike price before the expiration date.
Therefore, A is the correct answer.
Reference: Put Option: What It Is, How It Works, and How to Trade Them, Put: What It Is and How It Works in Investing, With Examples, Put Options: Definition, Overview, and Example

Question No : 11

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?

A.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.
B.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.
C.The TCP is the person whom Gershon can speak to if he becomes concerned about Isaac's mental capacity to make financial decisions.
D.The TCP is the person who is designated with authority to direct financial dealings for Isaac's account and make financial decisions.

정답:
Explanation:
A Trusted Contact Person (TCP) is someone that an investor authorizes their brokerage firm to contact in limited circumstances, such as if the broker has trouble reaching the investor or has a reasonable belief that the investor’s account may be exposed to possible financial exploitation. A TCP does not have the authority to make changes to the investor’s account or direct trading, unlike a Power of Attorney (POA). A TCP also does not have the power to place a temporary hold on the investor’s account, which is a decision made by the brokerage firm.
Therefore, C is the correct answer.
Reference: What is a Trusted Contact Person and why you should name one, Do You Need A ‘Trusted Contact’ To Help Protect You?, Investor Bulletin: Please Consider Adding a Trusted Contact Person to Your Account

Question No : 12

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?

A.Chamberlain Equity Fund has lower volatility since its 5-year annualized return is higher.
B.Fontaine Equity Fund is a better fund because it has a higher quartile ranking.
C.Fontaine Equity Fund has a lower risk level since its Sharpe Ratio is lower.
D.Fontaine Equity Fund's higher MER contributes to its lower 5-year annualized return.

정답:
Explanation:
The management expense ratio (MER) is the percentage of a fund’s assets that is paid to the fund manager for operating and managing the fund. A higher MER means that more of the fund’s returns are eaten up by fees, leaving less for the investors.
Therefore, Fontaine Equity Fund’s higher MER of 2.99% contributes to its lower 5-year annualized return of 11.25%, compared to Chamberlain Equity Fund’s MER of 2.57% and 5-year annualized return of 13.42%.
Therefore, D is the correct answer. , Management Expense Ratio (MER): Definition and How It Works - Investopedia

Question No : 13

What information does Fund Facts provide to potential investors?

A.What the mutual fund is currently investing in.
B.How to calculate the taxes owed from investment income.
C.The portfolio management strategy that is used.
D.The remuneration paid to the Independent Review Committee.

정답:
Explanation:
A Fund Facts document is a summary disclosure document that provides key information about a mutual fund, such as its investment objectives, risks, past performance, and fees. One of the information items that a Fund Facts document provides to potential investors is what the mutual fund is currently investing in, such as its top 10 holdings, asset mix, geographic allocation, and sector allocation. A Fund Facts document does not provide information on how to calculate taxes, portfolio management strategy, or remuneration of the Independent Review Committee.
Reference: Fund facts guide | Sun Life Global Investments, Mutual Funds - Fund Facts | ScotiaFunds

Question No : 14

With respect to the tax treatment of dividends received from a taxable Canadian corporation, which of the following statements is CORRECT?

A.Dividends are taxed the same way interest income is taxed.
B.Dividends from both preferred and common shares of Canadian corporations receive preferential tax treatment.
C.Dividends from non-resident corporations receive preferential tax treatment.
D.Only 50% of dividend income is subject to tax.

정답:
Explanation:
Dividends from both preferred and common shares of Canadian corporations receive preferential tax treatment because they are eligible for the dividend tax credit. This credit reduces the amount of tax payable on dividend income by accounting for the tax that the corporation has already paid on its earnings. Dividends from non-resident corporations do not qualify for this credit and are taxed at the same rate as interest income. Only 50% of capital gains, not dividend income, are subject to tax.
Reference: The Dividend Tax Rate in Canada: What You Need to Know Now - Hardbacon, How are Dividends Taxed in Canada? Exploring the Canadian Dividend Tax Credit

Question No : 15

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?

A.She can convert her RRSP to a locked-in retirement income fund (LRIF).
B.She can convert her RRSP to a registered retirement income fund (RRIF) this year or by December 31st of next year.
C.She can take the entire amount in cash, with no tax consequences because her RRSP funds were tax-sheltered.
D.She can purchase a registered term or life annuity.

정답:
Explanation:
A registered retirement savings plan (RRSP) is a retirement savings and investing vehicle for employees and the self-employed in Canada. Contributions to an RRSP are tax-deductible and grow tax-deferred until withdrawal. However, RRSPs have a maturity date of December 31st of the year in which the holder turns 71. By then, the holder must convert the RRSP to a registered retirement income fund (RRIF), purchase an annuity, or withdraw the funds in cash (subject to tax).
Therefore, B is the correct answer.
Reference: Registered Retirement Savings Plan (RRSP): Definition and Types, Registered Retirement Savings Plan (RRSP) - Canada.ca

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