CERTIFIED INVESTMENT FUND
DIRECTOR (CIFD) EXAMINATION
QUESTION AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A INSTANT DOWNLOAD PDF
1. The primary fiduciary duty of an investment fund director is to
A. Maximize short-term returns
B. Follow instructions of the fund manager
C. Market the fund to investors
D. Act in the best interests of investors
Directors owe fiduciary duties of loyalty and care, requiring decisions to
prioritize investor interests above all others.
2. Which document primarily defines the fund’s investment objectives and
restrictions?
A. Annual report
B. Prospectus
C. Marketing brochure
D. Board charter
B. Prospectus
The prospectus legally discloses objectives, strategies, risks, and limitations of
the fund.
3. A conflict of interest occurs when a director
A. Disagrees with management
B. Holds multiple board seats
, C. Has personal interests that may impair objective judgment
D. Votes against shareholders
Conflicts arise when personal or external interests could influence independent
decision-making.
4. Independent directors are mainly required to
A. Increase fund leverage
B. Represent management
C. Provide objective oversight of management
D. Approve marketing materials
Independence ensures unbiased oversight and protection of investors.
5. The board’s role in risk management is to
A. Eliminate all risks
B. Execute daily risk controls
C. Oversee the risk management framework
D. Ignore market risks
Boards oversee policies and ensure risks are identified and managed
appropriately.
6. Which committee typically oversees financial reporting?
A. Investment committee
B. Risk committee
C. Audit committee
D. Compliance committee
Audit committees focus on financial statements, controls, and auditor
relationships.
7. Net Asset Value (NAV) represents
A. Fund profits
B. Market price of shares
C. Total assets minus liabilities per share
D. Dividend yield
, NAV reflects the intrinsic value of fund shares.
8. Valuation policies are important because they
A. Increase returns
B. Reduce taxes
C. Ensure fair and consistent pricing of assets
D. Eliminate volatility
Proper valuation protects investors from unfair pricing.
9. Which body typically regulates investment funds?
A. Stock exchange
B. Central bank only
C. Financial regulatory authority
D. Ministry of finance
Dedicated financial regulators oversee fund operations and compliance.
10.The duty of care requires directors to
A. Guarantee profits
B. Act with reasonable skill, diligence, and prudence
C. Avoid all risks
D. Delegate all decisions
Directors must exercise informed and prudent judgment.
11.Liquidity risk refers to
A. Currency fluctuations
B. Inability to meet redemption requests
C. Credit defaults
D. Interest rate changes
Liquidity risk affects the fund’s ability to honor investor withdrawals.
12.A fund’s benchmark is used to
A. Set fees
DIRECTOR (CIFD) EXAMINATION
QUESTION AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A INSTANT DOWNLOAD PDF
1. The primary fiduciary duty of an investment fund director is to
A. Maximize short-term returns
B. Follow instructions of the fund manager
C. Market the fund to investors
D. Act in the best interests of investors
Directors owe fiduciary duties of loyalty and care, requiring decisions to
prioritize investor interests above all others.
2. Which document primarily defines the fund’s investment objectives and
restrictions?
A. Annual report
B. Prospectus
C. Marketing brochure
D. Board charter
B. Prospectus
The prospectus legally discloses objectives, strategies, risks, and limitations of
the fund.
3. A conflict of interest occurs when a director
A. Disagrees with management
B. Holds multiple board seats
, C. Has personal interests that may impair objective judgment
D. Votes against shareholders
Conflicts arise when personal or external interests could influence independent
decision-making.
4. Independent directors are mainly required to
A. Increase fund leverage
B. Represent management
C. Provide objective oversight of management
D. Approve marketing materials
Independence ensures unbiased oversight and protection of investors.
5. The board’s role in risk management is to
A. Eliminate all risks
B. Execute daily risk controls
C. Oversee the risk management framework
D. Ignore market risks
Boards oversee policies and ensure risks are identified and managed
appropriately.
6. Which committee typically oversees financial reporting?
A. Investment committee
B. Risk committee
C. Audit committee
D. Compliance committee
Audit committees focus on financial statements, controls, and auditor
relationships.
7. Net Asset Value (NAV) represents
A. Fund profits
B. Market price of shares
C. Total assets minus liabilities per share
D. Dividend yield
, NAV reflects the intrinsic value of fund shares.
8. Valuation policies are important because they
A. Increase returns
B. Reduce taxes
C. Ensure fair and consistent pricing of assets
D. Eliminate volatility
Proper valuation protects investors from unfair pricing.
9. Which body typically regulates investment funds?
A. Stock exchange
B. Central bank only
C. Financial regulatory authority
D. Ministry of finance
Dedicated financial regulators oversee fund operations and compliance.
10.The duty of care requires directors to
A. Guarantee profits
B. Act with reasonable skill, diligence, and prudence
C. Avoid all risks
D. Delegate all decisions
Directors must exercise informed and prudent judgment.
11.Liquidity risk refers to
A. Currency fluctuations
B. Inability to meet redemption requests
C. Credit defaults
D. Interest rate changes
Liquidity risk affects the fund’s ability to honor investor withdrawals.
12.A fund’s benchmark is used to
A. Set fees
