IFC Exam Questions and Answers | Exam-Dumps (Page: 11)

QUESTION: 81

What equity investment philosophy places greater emphasis on industry weighting than on security selection?

Growth at a reasonable price
Growth investing
Momentum investing
Sector rotation

Answer(s): D

Explanation:

Sector rotation is an investment philosophy that prioritizes weighting industries based on their expected performance during different economic cycles, placing less emphasis on individual security selection. The feedback from the document states:

"Sector rotation is a portfolio manager's attempt to profit through timing. It is based on the belief that different industries will perform well during certain stages of the economic cycle. Industries expected to outperform would be overweighted. More emphasis is placed on industry weighting than on security selection."

Reference:

Chapter 15 Selecting a Mutual FundLearning Domain: Evaluating and Selecting Mutual Funds

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QUESTION: 82

A fund manager who utilizes an interest rate anticipation philosophy forecasts a rise in interest rates.
What change in asset allocation should he implement?

Increase long-term bond and low coupon bond holdings
Increase long-term and high coupon bond holdings
Increase short-term T-bill and low coupon bond holdings
Increase short-term T-bill and high coupon bond holdings

Answer(s): D

Explanation:

When anticipating rising interest rates, a fund manager using an interest rate anticipation philosophy should reduce interest rate sensitivity by increasing holdings in short-term T-bills and high coupon bonds, which are less affected by rate increases. The feedback from the document states:

"Interest rate anticipation is a fixed-income investing philosophy that involves moving between long- term government bonds and very short-term T-bills, based on a forecast of interest rates over a certain time horizon. Price sensitivity to interest rate movements increases as the term to maturity increases and the coupon decreases. Therefore, to avoid a large capital loss if interest rates rise, the fund manager would decrease the fund's interest rate sensitivity."

Reference:

Chapter 15 Selecting a Mutual FundLearning Domain: Evaluating and Selecting Mutual Funds

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QUESTION: 83

Your soon-to-be-retired client has accumulated $700,000 in a mutual fund investment. He has consulted with you with respect to systematic withdrawal plans. His other sources of income in retirement are uncertain. He is not interested in leaving a legacy at his death.
Which plan would best suit his needs?

Annuity
Ratio withdrawal plan
Fixed-dollar withdrawal plan
Life withdrawal plan

Answer(s): A

Explanation:

An annuity provides a steady income stream until the client's death, suitable for someone with uncertain income sources and no interest in leaving a legacy. The feedback from the document states:

"The client needs a steady source of income from his investment. This rules out a ratio withdrawal plan and a life withdrawal plan. With a fixed-dollar withdrawal plan his capital could be exhausted before he dies. He should choose an annuity that will pay a fixed amount every year until his death. If he lives beyond the guaranteed term, the annuity will cease with his death, but this fact is not important as he does not wish to leave a legacy."

Reference:

Chapter 16 Mutual Fund Fees and ServicesLearning Domain: Evaluating and Selecting Mutual Funds

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QUESTION: 84

In what circumstance would an investor receive a T3 or T5 reporting a capital gain from a mutual fund investment?

When the investor sells her fund units at a price higher than their average cost
When the fund sells investments at a price higher than the average cost of the investment
When the value of the investor's fund units has risen
When the value of the fund's investments has risen

Answer(s): A

Explanation:

A T3 or T5 slip reporting a capital gain is issued when an investor sells their mutual fund units at a profit, not when the fund itself realizes gains. The feedback from the document states:

"In the normal course of portfolio management, shares are bought and sold either at a gain or at a loss for the fund. By the end of the year, many funds will have generated net capital gains on their portfolio transactions. The capital gains are distributed in the form of a capital gains dividend reported on a T5 or T3." However, for the investor, the correct answer is A, as clarified by standard tax rules: capital gains are realized by the investor upon selling units at a price higher than their average cost.

Reference:

Chapter 16 Mutual Fund Fees and ServicesLearning Domain: Evaluating and Selecting Mutual Funds

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QUESTION: 85

What value are withdrawals under a ratio withdrawal plan based upon?

Value at inception of plan
Average of start and year-end portfolio value
End of year portfolio value
Current portfolio value

Answer(s): D

Explanation:

Withdrawals under a ratio withdrawal plan are based on the current portfolio value, ensuring the fund is never fully depleted unless a 100% payout ratio is used. The feedback from the document states:

"Under a ratio withdrawal plan, the ratio is always based on the current portfolio value. Technically, this means that clients will never fully exhaust their mutual fund investment under this type of plan. Only in the unrealistic situation of a 100% payout ratio would the fund be completely paid out."

Reference:

Chapter 16 Mutual Fund Fees and ServicesLearning Domain: Evaluating and Selecting Mutual Funds

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QUESTION: 86

What is the securities administrator's power that is intended to ensure investors can make fully informed investment decisions?

Disclosure
Enforcement
Registration
Termination

Answer(s): A

Explanation:

The securities administrator's power of disclosure ensures that investors receive complete, accurate, and timely information to make informed decisions. The feedback from the document states:

"The securities administrators ensure that all documents and other required information are prepared in accordance with requirements and provided to appropriate parties in a timely manner. The securities administrators also review all prospectuses for full, true and plain disclosure. Complete, accurate and timely disclosure allows clients to make fully informed investment decisions."

Reference:

Chapter 17 Mutual Fund Dealer RegulationLearning Domain: Ethics, Compliance and Mutual Fund Regulations

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QUESTION: 87

When must client complaints be acknowledged in writing?

When the client has made a written complaint in any format
When complaints are made repeatedly by the same client with respect to the same representative
Any time the client has made a verbal or written complaint
When the client has made a written complaint in letter format

Answer(s): A

Explanation:

MFDA Policy No. 3 requires that all written client complaints, including emails, be acknowledged in writing. The feedback from the document states:

"MFDA Policy No. 3 specifies the minimum procedures for dealing with written client complaints (including emails). All written client complaints must be acknowledged in writing."

Reference:

Chapter 17 Mutual Fund Dealer RegulationLearning Domain: Ethics, Compliance and Mutual Fund Regulations

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QUESTION: 88

A mutual fund representative misrepresents the risks associated with a particular mutual fund in order to encourage a conservative client to purchase it.
What part of MFDA Rule No. 2 "Business Conduct" did the representative violate?

Deal fairly, honestly, and in good faith with clients
Have such experience and training as is consistent with the standards acceptable to the industry
Not engage in business conduct or practice that is unbecoming or detrimental to the public interest
Observe a high standard of ethics and conduct

Answer(s): A

Explanation:

Misrepresenting risks violates the MFDA Rule No. 2 requirement to deal fairly, honestly, and in good faith with clients. The feedback from the document states:

"MFDA Rule No 2 `Business Conduct' sets out the standards applicable to all MFDA members and their respective dealing representatives. In this case, the representative has not dealt honestly with the client by misrepresenting information."

Reference:

Chapter 17 Mutual Fund Dealer RegulationLearning Domain: Ethics, Compliance and Mutual Fund Regulations

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CSI IFC Exam (page: 11) CSI Investment Funds in Canada Updated on: 09-Feb-2026

QUESTION: 81

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QUESTION: 82

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QUESTION: 83

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QUESTION: 84

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QUESTION: 85

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QUESTION: 86

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QUESTION: 87

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QUESTION: 88

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CSI IFC Exam (page: 11)
CSI Investment Funds in Canada
Updated on: 09-Feb-2026