IFSE Institute CIFC Exam Practice Test Instant Access

Question 1

Your client has very limited investment knowledge and is confused about what is meant by "marginal tax rate". What do you tell him?

AIt is the tax rate applied to the next dollar earned.

BIt is the tax rate used in calculating taxable capital gains.

CIt is an amount resulting from dividing your total tax liability by your taxable income for the year.

DIt is the number used to gross-up Canadian dividend income.

Answer : A

Question 2

Over the course of a couple of weeks and several appointments, Harold was finally able to provide an investment solution for his new client, Felici

a. 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?

AMonitor investment performance to determine if the investment solution is on track to satisfy Felicia's financial needs.

BThere are no other responsibilities for Harold to fulfill until the time horizon has been reached for this investment solution.

CWithin 36 months of the implementation of the investment, Harold must review the KYC to ensure it is current.

DKYC does not need to be revisited or revised until there is a need to conduct additional trades for Felicia's account.

Answer : A

Question 3

Which of the following statement about Exchange Traded Funds (ETFs) is TRUE?

AUsually the market price of an ETF is the net asset value per unit (NAVPU) of the Fund on that day.

BInvestors may sell their ETFs in the stock market or redeem them through the Fund at the NAVPU of the day.

CETFs have lower MERs compared to mutual funds.

DAll ETFs are actively managed.

Answer : C

Question 4

Last year Peter's earned income from employment was $50,000.

Last year, after receiving a $2 per share in dividends from 500 shares in ABC Inc., a publicly-traded Canadian corporation, he sold his shares. The sale resulted in a capital gain of $15,000.

Based on the tax rates mentioned above, what is Peter's net federal tax liability for the year? (Round to 2 decimal places).

A$9,953.30

B$9,193.69

C$9,113.53

D$9,696.15

Answer : B

Question 5

What statement CORRECTLY describes a key difference between bonds and debentures?

ARegular secured bonds offer a higher level of income than debentures.

BBonds are secured by the specific assets of a company whereas debentures are not secured by real assets or collateral.

CDebentures have higher priority than bondholders for the company's assets in the event that the company goes bankrupt.

DDebentures are considered high risk because they are not backed by the reputation or credit worthiness of the issuer.

Answer : B

Question 6

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?

AHow much do you make individually each year?

BHow would you feel if you lost part of your money in the short-term?

CWhat is your investment objective for these savings?

DWhat is your net worth?

Answer : C

Question 7

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?

AIf 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).

BIf 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).

CIf 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).

DIf 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 : A

IFSE Institute CIFC Canadian Investment Funds Course Exam Practice Test