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NEW QUESTION # 37
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?
- A. Rakesh will not be subjected to a switch fee if his equity fund is a low-load fund.
- B. Rakesh will not be subjected to a switch fee if his equity fund is a no-load fund.
- C. Rakesh will not be subjected to a switch fee if his original units were purchased with a sales charge.
- D. Rakesh will not be subjected to a switch fee if it is outlined in the prospectus.
Answer: D
NEW QUESTION # 38
Ai Fen has recently become registered to sell mutual funds with Acadian Eastern Financial, a mutual fund dealer. Ai Fen determined that with her background of being a Chartered Financial Analyst, she can help people understand the nature of investing more easily than others in her field.
Which registration category will need to be prominently noted on Ai Fen's business card to comply with the
"holding out rule"?
- A. Investment Representative
- B. Chartered Financial Analyst
- C. Registered Representative
- D. Dealing Representative
Answer: D
NEW QUESTION # 39
You are collecting know your client (KYC) information for your new client, Yael. She has recently accepted an early retirement package from her employer and has $100,000 to invest. She is looking for an investment that will provide income to help pay her ongoing monthly expenses. Without this extra income, she would have trouble paying her bills. From your discussions, Yael understands that markets fluctuate and says she is comfortable with high risk. Which of the following would be a suitable investment?
- A. money market fund
- B. Canadian equity index fund
- C. mortgage fund
- D. global equity fund
Answer: C
NEW QUESTION # 40
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 determinewhether 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?
- A. Underground would be subject to less stringent listing requirements if they chose the stock exchange as compared to the OTC market.
- B. A stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market.
- C. If Underground chose to list on the OTC market, there would be no secondary market available for investors.
- D. Underground would still be directly involved in the trading of their shares on either market.
Answer: B
NEW QUESTION # 41
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?
- A. Move the DEF Bond Fund to the RRSP.
- B. Move $20,000 from each of the three funds to the RRSP.
- C. Move the ABC Canadian Equity Fund to the RRSP.
- D. Move the GHI Global Equity Fund to the RRSP
Answer: A
NEW QUESTION # 42
On January 2nd of this year Evan purchased 500 preferred shares of Ingram Ltd. The preferred shares have a par value of $25 per share and a quarterly dividend of $0.98 per share. They also give Evan the option to sell the shares back to Ingram at par value any time from now until September 1st two years from now. What type of preferred shares does Evan own?
- A. redeemable
- B. retractable
- C. participating
- D. convertible
Answer: B
NEW QUESTION # 43
Which statement regarding the underwriting process and over-the-counter (OTC) markets is CORRECT?
- A. Corporations must have their shares listed both on an exchange and the OTC market during the underwriting process.
- B. Many new stock issues that are underwritten by securities firms are first listed on a stock exchange before they are sold over-the-counter.
- C. During the underwriting process investment bankers raise investment capital from investors on behalf of corporations and governments issuing securities.
- D. The disclosure standards for stock exchanges are not as stringent as those imposed by the OTC market.
Answer: C
NEW QUESTION # 44
Iliana owns 1,000 participating preferred shares in the First Canadian Bank. Which of the following features are characteristic of her investment?
- A. Iliana is able to vote at the annual general meeting and elect members of the board of directors.
- B. Iliana has a right to share in the bank's net profits over and above the specified dividend rate.
- C. Iliana has the right to purchase more preferred shares in the company before common shareholders.
- D. Iliana can convert her preferred shares to common shares at a fixed price and within a specified time period.
Answer: A
NEW QUESTION # 45
Maxine is a portfolio manager who 15 years ago, purchased 100 shares of Never2Tacky, a social media corporation for Aspirations Global Technology Fund. She purchased the stock when it was trading at $10. Last year, the peak market price was $120. Presently, it is trading at $99. News agencies are now reporting that additional regulations regarding social media companies are about to be agreed upon by G7 countries. Maxine is concerned the market value of Never2Tacky is going to drop. She buys a put option with an exercise price of $95 with an expiry of 9 months.
What type of strategy is Maxine using?
- A. Modern portfolio theory
- B. Hedging
- C. Speculating
- D. Passively managing
Answer: B
NEW QUESTION # 46
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?
- A. money market funds, mortgage funds, bond funds
- B. Canadian dividend funds, global equity index funds, bond funds
- C. money market funds. Canadian dividend funds, sector funds
- D. money market funds, global equity funds, bond funds
Answer: A
NEW QUESTION # 47
Which of the following statements about your mutual fund registration is CORRECT?
- A. You can sell mutual funds anywhere in Canada as long as you are registered with one of the provincial or territorial securities commissions.
- B. You must inform the regulatory authorities of any material or significant changes to your personal circumstances.
- C. You must renew your registration through the online NRD system every two years.
- D. Your online application must be reviewed and approved by your mutual fund dealer before you can begin to sell mutual funds.
Answer: B
NEW QUESTION # 48
Maalik opens an account for a new client, John. During the new account process, Maalik determines that he will need to confirm John's identity. Which of the following statements about Maalik's identification requirements is CORRECT?
- A. If John wants to make a large cash deposit of $10,000 or more, Maalik is required to collect personal information about John and report it to his dealer. The dealer must report the information to the Canada Revenue Agency (CRA).
- B. If Maalik determines that there is anything suspicious about John's transaction, he is required to report the matter to his dealer. The dealer must report the matter to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
- C. If Maalik learns that John is the president of a state-owned company, Maalik is required to report John as a Politically Exposed Foreign Person (PEFP) to his dealer. If John is not a US person, the dealer must report the account to the Internal Revenue Service (IRS).
- D. If John attempts to make a suspicious deposit, Maalik is required to report the attempt to his dealer. The dealer must keep records of attempted suspicious transactions that are not reported to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Answer: B
NEW QUESTION # 49
Which of the following statements regarding mutual fund fees is correct?
- A. Trailer fees are only paid to mutual fund dealers when a purchase is made.
- B. Redemptions are made from units held by investors to pay trailer fees.
- C. Trading commissions are paid from the management fee.
- D. The mutual fund dealer receives trailer fees based on the value of assets under management.
Answer: D
NEW QUESTION # 50
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. $36,698
- B. $35,859
- C. $42,861
- D. $37,888
Answer: D
NEW QUESTION # 51
Which of the following statements best describes dollar-cost averaging?
- A. It is making lump-sum purchases when the market price for a mutual fund is low.
- B. It is buying a set dollar amount of a mutual fund on a regular basis
- C. It is the strategy of purchasing a set number of units of a mutual fund on a regular basis.
- D. It is a type of systematic withdrawal program.
Answer: B
NEW QUESTION # 52
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?
- A. Taline's risk profile should be "hiqh"" because she is willingto accept risk in order to maximize her investment returns.
- B. Taline's risk profile should be"low" because her risk capacityis low and she cannot afford lame investment losses.
- C. Faruq should assess Taline's risk profilebased on the higher of her: (1) risk tolerance and (2) risk capacity
- D. Faruq should override the risk that Taline is able to accept because her return expectations cannot otherwise be met.
Answer: B
NEW QUESTION # 53
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?
- A. The number of units is not fixed, and varies with investor demand and redemption orders.
- B. Units are bought and sold amongst the unitholders.
- C. Initial shares in the mutual fund are allotted through an initial public offering (IPO)
- D. Investors holding open-end funds can buy and sell their mutual funds anytime the stock market is open.
Answer: A
NEW QUESTION # 54
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