IFC Exam Questions and Answers | Exam-Dumps (Page: 4)

QUESTION: 25

What is the characteristic of a Stage 2 Family Commitment investor that most affects the ability to save for the long term?

Lack of liquidity
Marginal tax bracket
Wealth transfer considerations
Risk tolerance

Answer(s): A

Explanation:

Stage 2 Family Commitment investors typically face liquidity constraints due to family and financial obligations, which hinders their ability to save for long-term goals. The feedback from the document states:

"In Stage 2, the lack of liquidity that is typical results in a difficulty in allocating funds to savings. Although they might identify long-term goals, such as retirement saving, they can barely manage to save enough for more pressing short-term goals."

Reference:

Chapter 4 Getting to know the clientLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

QUESTION: 26

Ian is 25, employed, and has no dependents. He has no current financial or family obligations. He has asked for your recommendation for investing a $50,000 inheritance.
What asset allocation would typically suit an investor with Ian's characteristics?

10% in a bond fund, 80% in equity funds, 10% in a money market fund
10% in equity funds, 70% in a bond fund, 20% in a money market fund
35% in equity, 25% in a money market fund, 60% in a bond fund
50% in equity funds, 20% in a bond fund, and 30% in a money market fund

Answer(s): A

Explanation:

Ian, as a Stage 1 Early Earning Years investor, has no family or financial commitments, allowing for a higher risk tolerance. An asset allocation with a heavy equity weighting, such as 80% in equity funds, is suitable. The feedback from the document states:

"Ian would be considered a Stage 1 Early Earning Years investor. Stage 1 investors, in general, are free of family and financial commitments, and would typically have a higher ability to tolerate risk. Thus, with its higher level of risk and lower component of income-based investments, 10% in a bond fund, 80% in equity funds and 10% in a money market fund would be most likely to be suitable."

Reference:

Chapter 4 Getting to know the clientLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

QUESTION: 27

Your client contacts you requesting that you purchase a mutual fund based on a "hot tip" from a friend who has been a successful investor.
What bias is your client most likely being affected by?

Overconfidence
Availability
Endowment
Cognitive dissonance

Answer(s): A

Explanation:

Overconfidence bias leads investors to overestimate their knowledge or the reliability of information, such as a "hot tip," prompting them to act without sufficient due diligence. The feedback from the document states:

"Overconfidence is defined generally as unwarranted faith in one's intuitive reasoning, judgements and cognitive abilities. People tend to overestimate both their predictive abilities as well as the precision of the information they have been given. For example, an investor may get a tip from a wealth advisor or read something on the Internet about an investment opportunity, and then take action (that is, make the decision to invest) based on her perceived knowledge advantage."

Reference:

Chapter 5 Behavioural FinanceLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

QUESTION: 28

Jeff is a new client. He is 50 years old with modest savings in the low six figures, and wants to reinvest his portfolio to ensure that he can retire comfortably at age 65. In his meeting with Jeff, the advisor uncovered some of Jeff's biases. Jeff displayed several strong emotional biases along with a few weak cognitive biases.
What should the advisor do?

The advisor should moderate and adapt to Jeff's cognitive biases
The advisor should moderate and adapt to Jeff's emotional biases
The advisor should moderate Jeff's emotional biases
The advisor should adapt to Jeff's cognitive biases

Answer(s): B

Explanation:

Given Jeff's low wealth level and strong emotional biases, the advisor should moderate and adapt to these emotional biases to ensure suitable investment recommendations. The feedback from the document states:

"Jeff has a relatively low level of wealth and strong emotional biases; that's why the advisor should moderate and adapt to Jeff's emotional biases."

Reference:

Chapter 5 Behavioural FinanceLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

QUESTION: 29

How is a $10,000 withdrawal from a registered retirement savings plan (RRSP) taxed?

As regular income
As a deduction against other income
At a set rate of 30%
Based on the type of investment income type

Answer(s): A

Explanation:

Withdrawals from an RRSP are taxed as regular income at the plan holder's marginal tax rate, regardless of the type of income earned within the plan. The feedback from the document states:

"Contributions withdrawn from an RRSP are taxed as regular income at the plan holder's marginal tax rate."

Reference:

Chapter 6 Tax and Retirement PlanningLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

QUESTION: 30

What portion of the withdrawal from a Registered Educational Savings Plan is tax-free?

Dividend income earned
Capital gains earned
Original capital contributed
Canadian Educational Savings Grant (CESG) amounts

Answer(s): C

Explanation:

The original capital contributed to a Registered Educational Savings Plan (RESP) is not taxed upon withdrawal, while other amounts, such as income or grants, are taxable to the beneficiary. The feedback from the document states:

"The original capital withdrawn from an RESP is not taxed; all other amounts are taxed in the hands of the beneficiary."

Reference:

Chapter 6 Tax and Retirement PlanningLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

QUESTION: 31

An employer wants to offer his employees a pension plan. The goal is to provide a simple-to- understand plan that will reward all participants equally, regardless of their income level, and provide a retirement income based on a participant's years of service with the company.
What plan will best meet his requirements?

Defined contribution plan
Career average plan
Flat benefit plan
Final average plan

Answer(s): C

Explanation:

A flat benefit plan is straightforward, provides retirement income based solely on years of service, and is not influenced by participants' income levels, making it ideal for the employer's requirements.
The feedback from the document states:

"The flat benefit plan is simple to understand, provides a retirement income based solely on years of service, and is not affected by plan members' individual incomes."

Reference:

Chapter 6 Tax and Retirement PlanningLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

QUESTION: 32

Your client, a high-income earner in a high marginal tax bracket, is seeking to minimize the amount of tax he pays on investment income while continuing to invest in mutual funds.
Which mutual fund would best meet his investment objective?

Fixed-income fund
Canadian equity fund
Money market fund
Foreign equity fund

Answer(s): B

Explanation:

Canadian equity funds are tax-efficient for high-income earners as they generate dividends and capital gains, which are taxed at lower rates than interest income. The feedback from the document states:

"Of the funds listed, the most tax-effective would be a Canadian equity fund because it should generate some dividends and some capital gains. Money market funds and fixed income funds would each generate highly taxed interest income, while a foreign equity fund would not generate tax- advantaged Canadian dividend income or capital gains. Before recommending an equity fund, the mutual fund representative should ensure that the fund is suitable for his client because equity funds have a higher risk profile than funds that generate interest income."

Reference:

Chapter 6 Tax and Retirement PlanningLearning Domain: The Know Your Client Communication Process

Reveal Solution Next Question

CSI IFC Exam (page: 4) CSI Investment Funds in Canada Updated on: 09-Feb-2026

QUESTION: 25

Explanation:

Reference:

QUESTION: 26

Explanation:

Reference:

QUESTION: 27

Explanation:

Reference:

QUESTION: 28

Explanation:

Reference:

QUESTION: 29

Explanation:

Reference:

QUESTION: 30

Explanation:

Reference:

QUESTION: 31

Explanation:

Reference:

QUESTION: 32

Explanation:

Reference:

CSI IFC Exam (page: 4)
CSI Investment Funds in Canada
Updated on: 09-Feb-2026