CPH Exam Study Guide –
Practice Questions with
Verified Answers. GRADED A+.
Latest 2026/2027 Update
What does suitability mean for recommendations? - Answer✔✔-It means
ensuring all recommendations:
- Take into account the client' s unique circumstances and investment
objectives
- Are based on the adviser's understanding of the client's personal and financial
situation, as well as knowledge of the various available investment options
What does the KYC rule state? When must it be done? - Answer✔✔-States that
an advisor must use due diligence to learn the essential facts relevant to every
client and every dollar
It must be done each time:
1) A trade is accepted
,2) a recommendation is made by the brokerage
3) securities are transferred to the brokerage
4) a different representative is taking over the account
5) A material change in the KYC information for the account takes place
What information is included in KYC? - Answer✔✔-- person circumstances
(investment knowledge, risk tolerance)
- financial situation
- investment objectives
- age and time horizon
What are the two main types of retail brokerage firms? What do they offer? -
Answer✔✔-1) Full-service brokerage firms: These firms offer investment advice
(so they charge higher commission)
2) discount brokerage firms: these firms do not offer investment advice, they
just help clients purchase and sell shares (so commission is less)
,Does full-service brokerage firms and discount brokerage firms have to meet
suitability rules? - Answer✔✔-Full-service brokerage firms do because they are
providing advisory services
Discount brokerage firms because they do not offer advisory services can be
exempt, under the following conditions:
- Broker must act as a completely separate legal entity to any subsidiary that
does grant advice
- The separate entity must have completely separate business cards,
letterhead, registered persons, and documentation
- Individuals who work for the discount brokerage must not be compensated
based on transactional amounts
- The clients' written acknowledgement must be obtained to the effect that
they understand they are not being provided advice, so they don't have to
determine if the investments are suitable for them
What does KYP (know your product) mean? - Answer✔✔-Means
understanding how a product is constructed and how it is likely to perform in
given market conditions
Do dealers need the skills to review a new product? - Answer✔✔-Yes, they
cannot rely on the work of others in performing the review except for factual
information provided by the product manufacturer
, What are the 3 steps that IIROC requires dealer members to follow when
distributing non-arm's length investments (not in house products)? -
Answer✔✔-Step 1: product due dilligence of non-arm's-length investments
(understand the product)
Step 2: conflict of interest assessment
step 3: suitability assessments
When does a fiduciary duty occur? What level of duty of care results in a
fiduciary duty? - Answer✔✔-Occurs when a person who holds a position of
trust has a duty to the people who have placed their trust in them
The highest duty of care
What are the 5 primary values of the registrant code of ethics? - Answer✔✔-1)
exercise good professional judgment and care when dealing with their clients
2) Act with integrity, fairness, and honesty, and be trustworthy
3) conduct business professionally, and consistently update their knowledge
such that it reflects well on themselves their firm, and the industry as a whole
4) act in accordance with the securities acts
5) maintain complete confidence with respect to their clients' information
Practice Questions with
Verified Answers. GRADED A+.
Latest 2026/2027 Update
What does suitability mean for recommendations? - Answer✔✔-It means
ensuring all recommendations:
- Take into account the client' s unique circumstances and investment
objectives
- Are based on the adviser's understanding of the client's personal and financial
situation, as well as knowledge of the various available investment options
What does the KYC rule state? When must it be done? - Answer✔✔-States that
an advisor must use due diligence to learn the essential facts relevant to every
client and every dollar
It must be done each time:
1) A trade is accepted
,2) a recommendation is made by the brokerage
3) securities are transferred to the brokerage
4) a different representative is taking over the account
5) A material change in the KYC information for the account takes place
What information is included in KYC? - Answer✔✔-- person circumstances
(investment knowledge, risk tolerance)
- financial situation
- investment objectives
- age and time horizon
What are the two main types of retail brokerage firms? What do they offer? -
Answer✔✔-1) Full-service brokerage firms: These firms offer investment advice
(so they charge higher commission)
2) discount brokerage firms: these firms do not offer investment advice, they
just help clients purchase and sell shares (so commission is less)
,Does full-service brokerage firms and discount brokerage firms have to meet
suitability rules? - Answer✔✔-Full-service brokerage firms do because they are
providing advisory services
Discount brokerage firms because they do not offer advisory services can be
exempt, under the following conditions:
- Broker must act as a completely separate legal entity to any subsidiary that
does grant advice
- The separate entity must have completely separate business cards,
letterhead, registered persons, and documentation
- Individuals who work for the discount brokerage must not be compensated
based on transactional amounts
- The clients' written acknowledgement must be obtained to the effect that
they understand they are not being provided advice, so they don't have to
determine if the investments are suitable for them
What does KYP (know your product) mean? - Answer✔✔-Means
understanding how a product is constructed and how it is likely to perform in
given market conditions
Do dealers need the skills to review a new product? - Answer✔✔-Yes, they
cannot rely on the work of others in performing the review except for factual
information provided by the product manufacturer
, What are the 3 steps that IIROC requires dealer members to follow when
distributing non-arm's length investments (not in house products)? -
Answer✔✔-Step 1: product due dilligence of non-arm's-length investments
(understand the product)
Step 2: conflict of interest assessment
step 3: suitability assessments
When does a fiduciary duty occur? What level of duty of care results in a
fiduciary duty? - Answer✔✔-Occurs when a person who holds a position of
trust has a duty to the people who have placed their trust in them
The highest duty of care
What are the 5 primary values of the registrant code of ethics? - Answer✔✔-1)
exercise good professional judgment and care when dealing with their clients
2) Act with integrity, fairness, and honesty, and be trustworthy
3) conduct business professionally, and consistently update their knowledge
such that it reflects well on themselves their firm, and the industry as a whole
4) act in accordance with the securities acts
5) maintain complete confidence with respect to their clients' information
