Latest Nov 10, 2024 Real CIFC Exam Dumps Questions Valid CIFC Dumps PDF
IFSE Institute CIFC Exam Dumps - PDF Questions and Testing Engine
NEW QUESTION # 45
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 # 46
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. convertible
- B. retractable
- C. participating
- D. redeemable
Answer: B
Explanation:
Explanation
Retractable preferred shares are those that give the holder the option to sell them back to the issuer at a predetermined price and date. This is the case for Evan, who can sell his shares back to Ingram at par value any time from now until September 1st two years from now. References: Canadian Investment Funds Course (CIFC) | IFSE Institute
NEW QUESTION # 47
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?
- A. What is your investment objective for these savings?
- B. What is your net worth?
- C. How much do you make individually each year?
- D. How would you feel if you lost part of your money in the short-term?
Answer: A
Explanation:
Explanation
According to the Canadian Investment Funds Course, an investment objective is the goal or purpose of investing money. An investment objective reflects the investor's desired return, risk tolerance, time horizon, and liquidity needs. An investment objective is one of the key components of the know-your-client (KYC) information that a mutual fund representative must obtain and update from a client. The KYC information helps the representative to assess the suitability of any investment recommendation or trade instruction for the client2 In this case, Sarah and Kyle are a married couple who want to save towards a purchase of a sailboat. They are able to save $800 each month and have a tax-free savings account (TFSA) in Kyle's name with $5,000. They want you to recommend an investment for their monthly savings to help them achieve their goal faster. Before you can make any recommendation, you need to gather more information about their investment objective for these savings. You need to know how much return they expect, how much risk they are willing to take, how long they plan to invest, and how easily they want to access their money. These factors will help you to determine the most suitable investment option for them.
Therefore, the question you should ask them next is C. What is your investment objective for these savings?
References: 1: Canadian Investment Funds Course - IFSE Institute 3 (Unit 2: Know Your Client) 2: Canadian Investment Funds Course - IFSE Institute 4 (Unit 10: Portfolio Management)
NEW QUESTION # 48
Which document contains information regarding the Independent Review Committee compensation?
- A. Management Reports of Fund Performance
- B. Fund Facts
- C. Simplified Prospectus
- D. Annual Information Form
Answer: D
Explanation:
Explanation
The Annual Information Form (AIF) is a document that provides detailed information about a mutual fund, such as its history, structure, management, fees, expenses, risks, policies, and performance. The AIF also contains information regarding the Independent Review Committee (IRC) compensation, which is the amount of fees and expenses paid by the fund to the IRC members for their services. The IRC is a committee of independent individuals who oversee the fund manager's decisions on conflict of interest matters and act in the best interests of the fund and its investors12 References = web search results from search_web(query="Independent Review Committee compensation")12 and Canadian Investment Funds Course (CIFC) - Module 2: Investment Products - Section 2.2: Mutual Funds3
3: https://www.ifse.ca/wp-content/uploads/2021/08/CIFC-Module-2.pdf
NEW QUESTION # 49
Jonathan is a Dealing Representative who has just finished an appointment with his new client, Shirley.
Jonathan has concluded that Shirley has a low-risk profile but wants to establish additional savings of
$500,000. During their discussion, Shirley emphasizes she wants investments that are also tax efficient.
Jonathan learned that currently Shirley has no registered retirement savings plan (RRSP) and tax-free savings account (TFSA) contribution room due to using those opportunities by investmenting elsewhere.
What variable is a PRIMARY consideration for Jonathan when making an investment recommendation?
- A. Investment objective
- B. Shirley's risk profile.
- C. The tax consequences.
- D. Expected time horizon.
Answer: B
Explanation:
Explanation
Shirley's risk profile is the primary consideration for Jonathan when making an investment recommendation.
Risk profile is a measure of how much risk an investor is willing and able to take on in their portfolio. It is determined by factors such as age, income, net worth, investment objectives, time horizon, and personal preferences. It is essential for a dealing representative to assess the risk profile of their client before recommending any investment products or strategies, as they have a fiduciary duty to act in the best interest of their client and ensure that their recommendations are suitable for their client's needs and goals. The other variables are also important, but they are secondary to the risk profile. References: [Risk Profile], [Know Your Client (KYC)]
NEW QUESTION # 50
Which statement CORRECTLY describes index mutual funds and traditional exchange-traded funds (ETFs)?
- A. Index funds use an active investment management style, whereas ETFs use a passive investment management style.
- B. Both types of funds attempt to replicate the return of a specific market index, but their returns may not perfectly match the index.
- C. The market price of an ETF must match its net asset value (NAV), whereas there can be discrepancy in the pricing of index funds.
- D. Both types of funds are closed-end investments that are required to hold the same securities as the index at all times.
Answer: A
Explanation:
Explanation
Index mutual funds and traditional exchange-traded funds (ETFs) are both types of investment funds that use a passive investment management style, which means they try to track the performance of a specific market index, such as the S&P/TSX Composite Index or the S&P 500 Index. They do so by holding the same securities as the index or a representative sample of them, and by adjusting their portfolio composition and weighting to reflect any changes in the index. However, both types of funds may not be able to exactly replicate the return of the index for various reasons, such as fees, expenses, tracking error, rebalancing frequency, dividend reinvestment, and cash holdings. Therefore, there may be some deviation or difference between the fund's return and the index's return, which is called tracking difference.
References: Canadian Investment Funds Course, Chapter 4: Types of Investments1
NEW QUESTION # 51
Josephine is a Dealing Representative with Sunshine Mutual Funds Inc. for over 10 years. Her brother Jonathan has an account with Sunshine Mutual Funds Inc., too. Jonathan wants Josephine to manage his portfolio and make investment decisions on his behalf. Jonathan trusts his sister to make better investment choices than he can. He also wants to give Power of Attorney (POA) to Josephine so she can have full authority over his account.
How can Josephine respond to her brother's request?
- A. Josephine can accept a limited POA.
- B. Josephine cannot accept the POA as she is not the immediate family.
- C. Josephine should accept the POA after making a full disclosure to her dealer about the POA.
- D. Josephine can accept the POA as it is an exception that is permitted under the MFDA rules.
Answer: A
Explanation:
Explanation
According to the MFDA rules, a Member or an Approved Person cannot accept or act upon a general power of attorney or other similar authorization from a client in favour of the Member or Approved Person, unless the client is a spouse, parent, or child of the Approved Person and certain conditions are met. However, a Member or an Approved Person can accept a limited trading authorization from a client, which allows the Member or Approved Person to execute trades on behalf of the client, but not to engage in any discretionary trading.
Therefore, Josephine can accept a limited POA from her brother, as long as she does not make any investment decisions without his consent.
References = Canadian Investment Funds Course (CIFC) - Module 1: The Financial Services Industry - Section 1.3: Know Your Client (KYC)1 and web search results from search_web(query="power of attorney and mutual fund dealers association rules")23
1: https://www.ifse.ca/wp-content/uploads/2021/08/CIFC-Module-1.pdf
NEW QUESTION # 52
Which of the following could be a passively managed fund?
- A. labour-sponsored investment fund
- B. commodity pool
- C. hedge fund
- D. exchange traded fund (ETF)
Answer: D
Explanation:
Explanation
A passively managed fund is a type of investment fund that follows a predetermined strategy or rule to track the performance of a market index, such as the S&P 500, or a specific sector, such as technology or health care. A passively managed fund does not involve active decision-making by the fund manager, who simply replicates the composition and weighting of the index or sector. A passively managed fund aims to match the return and risk of the index or sector, rather than outperform it. A passively managed fund typically has lower fees and expenses than an actively managed fund, as it requires less research, trading, and oversight.
An exchange traded fund (ETF) is a type of passively managed fund that trades on a stock exchange like a common stock. An ETF holds a basket of securities that mirrors an index or sector, and its price fluctuates throughout the day based on supply and demand. An ETF allows investors to gain exposure to a diversified portfolio of securities with low costs, high liquidity, and tax efficiency.
A commodity pool is a type of investment fund that invests in futures contracts or options on commodities, such as oil, gold, or wheat. A commodity pool is usually actively managed by a commodity trading advisor (CTA), who uses various strategies to generate returns from the price movements of commodities.
A hedge fund is a type of investment fund that employs sophisticated and often aggressive strategies to achieve high returns and reduce risk. A hedge fund is usually actively managed by a hedge fund manager, who has wide discretion and flexibility to use various instruments, such as derivatives, leverage, short selling, arbitrage, etc. A hedge fund is typically available only to accredited investors who meet certain income and net worth criteria.
A labour-sponsored investment fund (LSIF) is a type of investment fund that provides venture capital to small and medium-sized Canadian businesses, while offering tax benefits to investors. An LSIF is usually actively managed by a labour union or an organization affiliated with a labour union, who selects the companies to invest in based on their potential for growth and job creation.
References: Canadian Investment Funds Course, Chapter 4: Types of Investments1
NEW QUESTION # 53
Exchange traded funds (ETFs) that track an index and index mutual funds have many similarities. However, what is a major difference between these two products?
- A. ETFs can be purchased continuously throughout the trading day while index funds can only be bought or sold at the end of the day.
- B. The market price of ETFs always matches the underlying basket of securities while there can be a discrepancy in pricing index funds.
- C. ETFs do not have management fees since they are exchange traded while index funds do incur such fees.
- D. While ETFs are prone to tracking errors, index funds are perfectly aligned with their underlying index.
Answer: A
Explanation:
Explanation
ETFs can be purchased continuously throughout the trading day while index funds can only be bought or sold at the end of the day. This is because ETFs are traded on a stock exchange like stocks, while index funds are traded directly with the fund company like mutual funds. This difference gives ETFs more liquidity and flexibility than index funds, as investors can buy and sell ETFs at any time during market hours at the prevailing market price. Index funds, on the other hand, are priced only once a day at the end of the day based on the net asset value per unit (NAVPU) of the fund. Both ETFs and index funds are prone to tracking errors (A), which are the differences between the performance of the fund and the performance of the underlying index. Tracking errors can be caused by various factors, such as fees, expenses, dividends, rebalancing, and market conditions. The market price of ETFs does not always match the underlying basket of securities , as it is determined by supply and demand in the market. There can be a discrepancy between the market price and the NAVPU of an ETF, which is called the premium or discount. Index funds, on the other hand, are priced based on the NAVPU of the fund, which reflects the value of the underlying securities. Both ETFs and index funds have management fees (D), as they are both types of mutual funds that incur costs for managing and operating the fund. However, ETFs usually have lower management fees than index funds, as they are more passive and have lower turnover and distribution costs. References: Canadian Investment Funds Course (CIFC) | IFSE Institute
NEW QUESTION # 54
With respect to the tax treatment of dividends received from a taxable Canadian corporation, which of the following statements is CORRECT?
- A. Dividends from non-resident corporations receive preferential tax treatment.
- B. Dividends from both preferred and common shares of Canadian corporations receive preferential tax treatment.
- C. Dividends are taxed the same way interest income is taxed.
- D. Only 50% of dividend income is subject to tax.
Answer: B
NEW QUESTION # 55
Which of the following Dealing Representatives has fulfilled their "Know Your Product" obligation?
- A. Tevy recommends the firm's in-house Principal Protected Note (PPN) to her client Mei. Since Mei is seeking safety and liquidity, Tevy determines that the PPN is a good product for her because it's on the firm's list and the principal is guaranteed.
- B. Rehan reviews the features of the Hedge Fund that her client, Georgi, wants to buy. When Rehan explains the product to Georgi, she tells him that the Hedge Fund has a lock-up period and he will not be able to redeem the fund if he needs the money.
- C. Godfried opens an account for his new client, Nadia. When the investments from her previous dealer are transferred in, Godfried sells the investments. Nadia becomes very upset when she is charged $4,329 in redemption fees that neither she nor Godfried expected.
- D. Otev meets with his client, Saeed. Saeed's brother invested in the Navigator Eastern Asia Fund and it provided great returns. When Saeed asks Otev if the Navigator Fund or something similar is available through his firm, Otev doesn't know and doesn't look it up.
Answer: B
Explanation:
Explanation
The "Know Your Product" obligation requires that Dealing Representatives understand all the products they purchase, sell or recommend for their clients, including their structure, features, risks, costs and suitability.
Rehan has fulfilled this obligation by reviewing the features of the Hedge Fund and explaining them to Georgi, who may not be aware of the lock-up period and its implications. The other Dealing Representatives have failed to fulfill their obligation by either not knowing or not disclosing important information about the products they deal with.
References: Canadian Investment Funds Course, Chapter 7: Know Your Product1
NEW QUESTION # 56
Malik has been saving money for retirement but he is worried about the impact inflation may have on the value of his savings. He wants to purchase a bond that will give him a steady stream of income that is greater than the inflation rate. He has found a bond issued by a major airline with a market price of $9,200, a par value of $10,000, and a coupon rate of 6.75%. What is the current yield of this bond?
- A. 6.21%
- B. 7.34%
- C. 6.25%
- D. 6.75%
Answer: B
Explanation:
Explanation
The current yield of a bond is the annual interest payment divided by the current market price of the bond. The annual interest payment is the coupon rate multiplied by the par value of the bond. In this case, the annual interest payment is:
6.75%×10,000=675
The current market price of the bond is $9,200. Therefore, the current yield is:
9200675×100%=7.34%
The current yield is higher than the coupon rate because the bond is selling at a discount, meaning that its market price is lower than its par value. This implies that the bond is offering a higher return than the prevailing market interest rate. However, the current yield does not take into account the capital gain or loss that will occur when the bond matures or is sold. A more accurate measure of the bond's return is the yield to maturity (YTM), which is the annualized rate of return that accounts for both the interest payments and the price change of the bond over its remaining term.
References:
Canadian Investment Funds Course (CIFC) Study Guide, Chapter 5: Fixed-Income Securities, Section
5.2: Bond Pricing and Yield, page 5-61
Current Yield Definition - Investopedia2
NEW QUESTION # 57
Loretta is looking for a well diversified equity fund. Her ideal mutual fund would hold investments within and outside Canada. Although she is seeking growth, Loretta also wants a mutual fund that invests in quality companies.
Which of the following mutual funds would be the best choice for Loretta?
- A. Polar Global Blue Chip Equity Fund - this global equity fund invests in large, established companies in mostly stable and mature foreign markets.
- B. Lennox Energy Fund - this sector fund invests primarily in Canadian oil and gas companies that sell both to domestic and foreign markets.
- C. Auric Precious Metals Fund - this sector fund invests in Canadian companies that participate in the precious metals sector such as owning mines in foreign countries.
- D. Dominion International Growth Fund - this international equity fund invests in small and medium sized companies in countries all around the world.
Answer: A
Explanation:
Explanation
Loretta is looking for a well diversified equity fund that invests both within and outside Canada. She also wants a fund that invests in quality companies, which implies that she prefers lower risk and higher stability. A global equity fund would meet her criteria, as it can invest in any country, including Canada, and diversify across different regions and markets. A global equity fund that focuses on large, established companies, also known as blue chip stocks, would also suit her preference for quality and stability, as these companies tend to have strong financial performance, competitive advantages, and consistent dividends. Therefore, the Polar Global Blue Chip Equity Fund would be the best choice for Loretta among the given options.
References: Canadian Investment Funds Course, Unit 6, Section 6.2
NEW QUESTION # 58
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
Explanation:
Explanation
According to the Registered Investments (RIs) - Canada.ca, you must inform the regulatory authorities of any material or significant changes to your personal circumstances, such as a change of name, address, or employment status. You must also report any disciplinary actions, criminal charges, or civil lawsuits that may affect your suitability as a registrant. Failing to do so may result in suspension or revocation of your registration.
NEW QUESTION # 59
Your client, Helen, just received her non-registered account statement which states that one of her mutual funds made an interest income distribution during the year. She asks you how she will be taxed on the distribution. What do you tell Helen?
- A. She will pay taxes on 50% of the distribution.
- B. She will pay taxes on the grossed-up amount of the income.
- C. She will pay taxes at her average tax rate.
- D. She will pay taxes at her top marginal tax rate.
Answer: D
NEW QUESTION # 60
Manuel is a Dealing Representative for Commonwealth Financial Inc., a mutual fund dealer. His dealer represents many different mutual fund families available, including their own: CF Group of Funds. He is considering recommending a CF equity fund to one of his clients, Stefania. While describing details about the fund, he informs her that accounts are set-up in nominee name, and that their mutual funds are not transferable.
In addition, the fund does pay trailer fees.
What type of information has Manuel described about his potential investment recommendation?
- A. Excessive trading
- B. The material conflict of interest
- C. Features of a locked-in plan
- D. A Letter of Engagement
Answer: B
Explanation:
Explanation
A material conflict of interest is a situation where a dealing representative or a mutual fund dealer has an interest that may affect their ability to act in the best interest of their clients, or that may influence their judgment or behaviour. A material conflict of interest may arise from various sources, such as compensation arrangements, personal or business relationships, or ownership interests. In this case, Manuel has described some information that may indicate a material conflict of interest, such as:
*His dealer represents many different mutual fund families, including their own: CF Group of Funds. This may create a bias or incentive for Manuel to recommend the CF equity fund over other funds that may be more suitable for his client, Stefania.
*The accounts are set-up in nominee name, which means that the dealer is the registered owner of the mutual funds and holds them in trust for the client. This may affect the client's rights and benefits as the beneficial owner of the funds, such as voting rights, transferability, or access to information.
*The mutual funds are not transferable, which means that the client cannot move them to another dealer or fund family without selling them and incurring fees or taxes. This may limit the client's flexibility and choice, and create a lock-in effect for the dealer.
*The fund does pay trailer fees, which are ongoing commissions paid by the fund manager to the dealer for the services and advice provided to the client. This may create a conflict of interest for Manuel, as he may receive a portion of the trailer fees as part of his compensation. This may influence his recommendation of the fund, as he may benefit from the client's continued investment in the fund.
Manuel should disclose these potential material conflicts of interest to his client, Stefania, and explain how they may affect his recommendation of the CF equity fund. He should also ensure that his recommendation is based on the client's needs, objectives, risk tolerance, and time horizon, and that he provides the client with the necessary information and documents, such as the fund facts, to make an informed decision.
References = Canadian Investment Funds Course, Unit 7: The Regulatory Environment, Lesson 1: The Regulatory Framework, Section 7.1.3: Material Conflicts of Interest1; CIFC prepkit, Chapter 7: The Regulatory Environment, Question 7.1.3 2
NEW QUESTION # 61
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. $37,888
- B. $42,861
- C. $35,859
- D. $36,698
Answer: A
Explanation:
Explanation
A is correct because Francis will receive $37,888 in Canadian dollars when he redeems the Funds. This is calculated by dividing the current proceeds from the redemption in US dollars by the current CAD/USD exchange rate and rounding to the nearest dollar. That is,
NEW QUESTION # 62
Nelson is a Dealing Representative with True Wealth Advisors Inc., a mutual fund dealer. Nelson follows proper procedures related to his firm's Relationship Disclosure Information (RDI). Which of the following CORRECTLY describes how Nelson is permitted to evidence that he satisfied his RDI obligation?
- A. Nelson may deliver the RDI to clients who request it and keep detailed notes of the clients who were provided with the RDI.
- B. Nelson may retain a copy of the RDI in the client file with detailed notes to confirm that he provided and explained the RDI to the client.
- C. Nelson can formalize his relationship under the RDI using a Letter of Engagement that specifies duties, responsibilities, and level of service.
- D. Nelson can record detailed notes which confirm that he provided and explained the Fund Facts to the client within 2 days of the RDI.
Answer: B
NEW QUESTION # 63
Which of the following statements about pension adjustments (PA) is TRUE?
- A. You will receive a PA whether you are in a defined contribution or a defined benefit pension plan.
- B. They represent how much your pension will increase due to years of service.
- C. They increase your registered retirement savings plan (RRSP) room by the amount of the pension adjustment.
- D. They represent how much your pension is reduced due to market conditions.
Answer: A
Explanation:
Explanation
A pension adjustment (PA) is the amount that the Canada Revenue Agency (CRA) assigns to your pension plan each year to reflect the value of the pension benefits that you earned. The PA reduces your registered retirement savings plan (RRSP) contribution room for the following year by the same amount. The PA ensures that all taxpayers have access to comparable tax assistance, regardless of the type of pension plan they participate in. You will receive a PA whether you are in a defined contribution or a defined benefit pension plan, but the calculation of the PA will differ depending on the type of plan. (Canadian Investment Funds Course, Chapter 8, Section 8.2) References:
Canadian Investment Funds Course, Chapter 8, Section 8.2: Retirement Savings Plans and Pension Plans Investopedia: Pension Adjustment: Definition and Types of Plans1 PlanEasy: What Is A Pension Adjustment?2
NEW QUESTION # 64
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. Initial shares in the mutual fund are allotted through an initial public offering (IPO)
- C. Units are bought and sold amongst the unitholders.
- D. Investors holding open-end funds can buy and sell their mutual funds anytime the stock market is open.
Answer: A
NEW QUESTION # 65
Which of the followings describes segregated funds?
- A. Segregated funds flow through capital losses to investors because the investors are the owners of the underlying fund.
- B. Segregated funds are subject to securities regulation because they are distributed by mutual fund dealing representatives.
- C. Segregated funds offer some protection of the capital invested but there is an added cost for the protection.
- D. Segregated funds have high returns, high management fees, and cannot be redeemed until the maturity date of the contract.
Answer: C
Explanation:
Explanation
Segregated funds offer some protection of the capital invested but there is an added cost for the protection.
Segregated funds are contracts issued by life insurance companies that invest in underlying funds, similar to mutual funds. Segregated funds have a maturity guarantee and a death benefit guarantee, which ensure that the investor or their beneficiary will receive a certain percentage of their initial investment, regardless of market fluctuations. However, these guarantees come at a cost, which is reflected in higher management fees and insurance fees than mutual funds. Segregated funds do not have high returns, as they depend on the performance of the underlying funds. Segregated funds can be redeemed before the maturity date of the contract, but they may be subject to early redemption fees or market value adjustments. Segregated funds do not flow through capital losses to investors, as they are not considered owners of the underlying fund.
Segregated funds are subject to insurance regulation, not securities regulation, because they are distributed by life insurance agents. References: Segregated Funds
NEW QUESTION # 66
Sachin owns units of a long-term bond fund. He has heard that the Bank of Canada is likely to make it more expensive to borrow money. He is worried that the value of his investment is going to drop. What sort of investing risk is Sachin experiencing?
- A. interest rate risk
- B. liquidity risk
- C. market risk
- D. inflation risk
Answer: A
Explanation:
Explanation
Sachin is experiencing interest rate risk, which is the risk that changes in interest rates will affect the value of fixed income securities. When interest rates rise, bond prices fall, and vice versa. This is because investors will demand a higher yield to invest in bonds that pay a lower coupon rate than the prevailing market rate.
Therefore, if the Bank of Canada makes it more expensive to borrow money, the existing bonds in Sachin's fund will become less attractive and their prices will drop. Interest rate risk is measured by a fixed income security's duration, with longer-term bonds having a greater price sensitivity to rate changes. Sachin can reduce his interest rate risk by diversifying his bond maturities or hedging using interest rate derivatives1.
References: Canadian Investment Funds Course, Chapter 3: Risk and Return2
NEW QUESTION # 67
Gershon is a Dealing Representative and he opens a new account for his client, Isaac. Gershon collects the necessary information from Isaac in order to designate the Trusted Contact Person (TCP) for Isaac's account.
Which of the following statements about Isaac's TCP is CORRECT?
- A. The TCP is the person who is designated with authority to direct financial dealings for Isaac's account and make financial decisions.
- B. The TCP is an alternative authority on Isaac's account that has the power to place a temporary hold on Isaac's account to disallow trading.
- C. The TCP is an alternative to a Power of Attorney (PQA) and has the authority to make changes to Isaac's account and direct trading.
- D. The TCP is the person whom Gershon can speak to if he becomes concerned about Isaac's mental capacity to make financial decisions.
Answer: D
Explanation:
Explanation
A Trusted Contact Person (TCP) is someone that an investor authorizes their brokerage firm to contact in limited circumstances, such as if the broker has trouble reaching the investor or has a reasonable belief that the investor's account may be exposed to possible financial exploitation. A TCP does not have the authority to make changes to the investor's account or direct trading, unlike a Power of Attorney (POA). A TCP also does not have the power to place a temporary hold on the investor's account, which is a decision made by the brokerage firm. Therefore, C is the correct answer. References: What is a Trusted Contact Person and why you should name one, Do You Need A 'Trusted Contact' To Help Protect You?, Investor Bulletin: Please Consider Adding a Trusted Contact Person to Your Account
NEW QUESTION # 68
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
Answer: D
NEW QUESTION # 69
......
Reliable Investments & Banking CIFC Dumps PDF Nov 10, 2024 Recently Updated Questions: https://pass4sure.test4cram.com/CIFC_real-exam-dumps.html