Question # 1
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? |
| A. $7.19
| | B. $7.65
| | C. $8.25
| | D. $9.27 |
C. $8.25
Explanation: This is the net asset value per unit (NAVPU) for the Marigold Canadian
Dividend Fund for July 6. The NAVPU is calculated by dividing the net asset value (NAV) of
the fund by the number of units outstanding. In this case, the NAVPU is $8.25
($45,668,900 / 5,564,443).
The NAV is the value of a fund’s assets minus the value of its liabilities. The value of assets
is the value of all the securities in the portfolio, plus any cash and cash equivalents, plus
any accrued income for the day. The value of liabilities is the value of all short-term and
long-term liabilities, plus any accrued expenses for the day. The NAV is usually expressed
on a per-share or per-unit basis, which is the NAVPU.
The NAVPU is the price at which investors can buy or sell units of the fund. It is determined
at the end of each trading day based on the closing market prices of the portfolio’s
securities. The NAVPU can change daily depending on the performance of the securities in
the fund and the fund’s expenses.
Question # 2
| Which of the following statements about standard deviation is CORRECT? |
| A. Indicates how much an investment's performance fluctuates around its average
historical return. | | B. A standard deviation greater than one indicates a higher level of volatility than the
market. | | C. Measures the systematic risk of an investment relative to a benchmark index. | | D. Standard deviation is also referred to as beta. |
A. Indicates how much an investment's performance fluctuates around its average
historical return.
Explanation: The correct answer is A. Indicates how much an investment’s performance
fluctuates around its average historical return.
Standard deviation is a measure of how spread out the data points are from the mean
value. It is calculated as the square root of the variance, which is the average of the
squared differences from the mean. Standard deviation can be used to assess the volatility
or risk of an investment by showing how much the returns deviate from the expected or
average return. A higher standard deviation means that the investment has a wider range
of possible outcomes, which implies more uncertainty and risk. A lower standard deviation
means that the investment has a narrower range of possible outcomes, which implies more
stability and consistency.
B. A standard deviation greater than one indicates a higher level of volatility than the
market. This statement is incorrect because the standard deviation of an investment is not
directly comparable to the standard deviation of the market, unless they have the same
mean return. The standard deviation of an investment only measures the absolute variation
of the returns, not the relative variation to the market. A better measure of the relative
volatility of an investment to the market is beta, which is the ratio of the covariance of the
investment and the market to the variance of the market.
C. Measures the systematic risk of an investment relative to a benchmark index. This
statement is incorrect because the standard deviation of an investment does not distinguish
between the systematic risk and the unsystematic risk. The systematic risk is the risk that
affects the entire market or a large segment of the market, such as inflation, interest rates,
or political events. The unsystematic risk is the risk that affects a specific investment or a
small group of investments, such as management decisions, product quality, or lawsuits.
The standard deviation of an investment captures both types of risk, whereas the beta of
an investment only captures the systematic risk.
D. Standard deviation is also referred to as beta. This statement is incorrect because
standard deviation and beta are different measures of risk. Standard deviation measures
the absolute variation of the returns of an investment, whereas beta measures the relative
variation of the returns of an investment to the market. Standard deviation is a measure of
total risk, whereas beta is a measure of systematic risk.
Question # 3
| Your clients, Philip and Helen, have a disabled son, Alex, age 22. They want to set up a
registered disability savings plan (RDSP) for Alex and have asked you for some
information.
Which statement is TRUE? |
| A. Philip and Helen's contributions are refundable to them.
| | B. There is no annual or lifetime maximum limit on contributions.
| | C. Alex must quality for the disability tax credit.
| | D. Philip and Helen's contributions are tax-deductible. |
C. Alex must quality for the disability tax credit.
Explanation: A registered disability savings plan (RDSP) is a savings plan intended to help
parents and others save for the long-term financial security of a person who is eligible for
the disability tax credit (DTC). The DTC is a non-refundable tax credit that helps persons
with disabilities or their supporting persons reduce the amount of income tax they may
have to pay. To be eligible for the DTC, a person must have a severe and prolonged
impairment in physical or mental functions, as defined by the Income Tax Act and as
certified by a medical practitioner. Therefore, Alex must qualify for the DTC in order to be
eligible for an RDSP.
Question # 4
| 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? |
| A. That the recommended investment is different from what they currently own to avoid
over-concentration.
| | B. That the risk profile for this new account is the same as what has been determined for
other accounts.
| | C. That the risk profile of the investment and each client's individual risk profile are a
match.
| | D. That the investment recommendation is based on the risk profile of the new joint
account. |
D. That the investment recommendation is based on the risk profile of the new joint
account.
Explanation: Dustin needs to ensure that his recommendation is suitable for the new joint
account, which may have a different risk profile than the individual accounts of Salvatore
and Harriet. A joint account is an account that is owned by two or more people who share
the rights and responsibilities of the account. A joint account may have different investment
objectives, time horizon, risk tolerance, and financial situation than the individual accounts
of the joint owners. Therefore, Dustin needs to conduct a know your client (KYC) process
for the joint account and determine the appropriate risk profile for the account, based on
the collective responses of Salvatore and Harriet. The risk profile of the joint account will guide Dustin in recommending suitable investment products and services that match the
goals and needs of the joint owners.
Question # 5
| What role do investment dealers play in the Canadian and global financial markets? |
| A. They are contributors to a company's profits.
| | B. They are contributors to an investor's earnings.
| | C. They assist with the exchange of capital for a financial instrument.
| | D. By underwriting financial instruments, they raise capital for investors. |
C. They assist with the exchange of capital for a financial instrument.
Explanation: Investment dealers are people or firms who buy and sell securities for their
own account, whether through a broker or otherwise. They play an important role in the Canadian and global financial markets because they are market makers, create liquidity,
and help promote long-term growth in the market. They also provide investment services to
investors, such as underwriting securities, raising capital, and offering advice. By assisting
with the exchange of capital for a financial instrument, they facilitate the flow of funds
between savers and borrowers, and between different sectors and countries. The other
options are not accurate descriptions of the role of investment dealers.
Question # 6
| 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? |
| A. Distributions from mutual fund corporations are not taxable to investors.
| | B. Mutual fund trusts can only distribute capital gains and Canadian dividends.
| | C. Capital losses may be distributed from mutual fund corporations.
| | D. Any income received by a mutual fund corporation is distributed in the form of either
capital gains or Canadian dividends. |
D. Any income received by a mutual fund corporation is distributed in the form of either
capital gains or Canadian dividends.
Explanation: A mutual fund corporation is a type of mutual fund structure that is organized
as a corporation and issues different classes of shares to investors. A mutual fund
corporation has the ability to allocate its income and expenses among the different classes
of shares, and to distribute any income received by the corporation in the form of either
capital gains or Canadian dividends. These types of distributions are taxed at lower rates
than interest or foreign income, which may reduce the tax liability of the investors. A mutual
fund corporation can also use capital losses to offset capital gains, and carry them forward
or back to reduce taxable income in other years.
Question # 7
| Which of the following best describes how a target date fund works? |
| A. Through the years, the asset allocation shifts from equities towards fixed income as the
maturity date approaches.
| | B. Through the years, the asset allocation shifts from fixed income towards equities as the
maturity date approaches.
| | C. The mutual fund is constantly rebalanced to maintain an even split between equities and
fixed income through the life of the mutual fund.
| | D. In exchange for a lump-sum purchase the unitholder receives guaranteed monthly
payments for life. |
A. Through the years, the asset allocation shifts from equities towards fixed income as the
maturity date approaches.
Explanation: This is because a target date fund is designed to reduce the risk and volatility
of the portfolio as the investor gets closer to their retirement or other savings goal. Equities
tend to have higher returns but also higher risk than fixed income, so a target date fund
gradually reduces the exposure to equities and increases the exposure to fixed income
over time. This way, the investor can benefit from the growth potential of equities in the
early years and preserve their capital with the stability of fixed income in the later years.
Question # 8
| Jabir begins the registration process with his new dealer Prosper Wealth Inc. Jabir is
excited about his new career and eager to start calling clients, opening new accounts, and
selling investments. Which of the following CORRECTLY describes when Jabir will be
eligible to open new client accounts and sell investments? |
| A. Upon employment with the dealer
| | B. Upon registration application by the dealer
| | C. Upon passing the proficiency course
| | D. Upon formal confirmation from the regulator |
D. Upon formal confirmation from the regulator
Explanation: Jabir will be eligible to open new client accounts and sell investments only
upon formal confirmation from the regulator. Before he can start his activities as a dealing
representative, he must complete the registration process, which includes passing the
proficiency course, applying for registration through his dealer, and obtaining approval from
the securities regulator in his jurisdiction.
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Canadian Investment Funds Course Exam Exam Dumps
Exam Code: CIFC
Exam Name: Canadian Investment Funds Course Exam
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Questions People Ask About CIFC Exam
The CIFC exam is for individuals who wish to become mutual fund dealing representatives in Canada. It covers various topics related to mutual funds, including regulatory environment, types of investments, portfolio management, and making recommendations.
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