Investment Funds in Canada (IFIC)
Chapter 10-11: Conservative MF-
Questions and All Correct Answers
2026-2027 Updated.
Mutual Fund - Answer -an investment vehicle operated by an investment company that pools
contributions from investors and invests these proceeds into a variety of securities, including
stocks, bonds and money market instruments
-individuals who contribute money become share or unitholders in the fund and share in the
income, gains, losses and expenses the fund incurs in proportion to the number of units or
shares that they own.
-professional money managers manage the assets of the fund by investing the proceeds
according to the fund's policies and objectives and based on a particular investing style
Net Asset Value Per Share (NAVPS) or Net Asset Value Per Unit (NAVPU) - Answer -Mutual
fund shares/units are redeemable on demand at the fund's current price or (NAVPS) or
(NAVPU), which depends on the market value of the fund's portfolio of securities at that time
Prospectus - Answer -states a funds prime investment goals
-covers the degree of safety or risk that is acceptable
-whether income or capital gain is the prime objective
-the main types of securities in the fund's investment portfolio
Advantages of Mutual Funds - Answer -low-cost professional management
-diversification
-variety of types of funds and transferability
-variety of purchase and redemption plans
-liquidity
-ease of estate planning
-loan collateral and margin eligibility
-various special options
Mutual Fund Advantage: Low-Cost Professional Management - Answer -the fund manager, an
investment specialist, manages the fund's investment portfolio on a continuing basis. This is an
inexpensive way for the small investor to access professional management of their investments
when they do not have the time, knowledge or expertise to monitor their portfolio of securities
-the fund manager fine-tunes the fund's asset mix as market conditions change.
, Mutual Fund Advantage: Diversification - Answer -a typical large fund might have a portfolio
consisting of 60 to 100 or more different securities in 15 to 20 industries. For the individual
investor, acquiring such a portfolio of stocks is likely not feasible. Because individual accounts
are pooled, sponsors of managed products enjoy economies of scale that can be shared with
mutual fund share or unit holders.
-managed funds can trade more economically than the individual investor. Thus, fund
ownership provides a low-cost way for small investors to acquire a diversified portfolio.
Mutual Fund Advantage: Variety Of Types Of Funds And Transferability - Answer -the
availability of a wide range of mutual funds enables investors to meet a wide range of objectives
(i.e., from fixed-income funds through to aggressive equity funds).
-many fund families also permit investors to transfer between two or more different funds being
managed by the same sponsor, usually at little or no added fee.
Mutual Fund Advantage: Variety Of Purchase And Redemption Plans - Answer -there are many
purchase plans, ranging from one-time, lump-sum purchases to regular purchases in small
amounts under pre-authorized contribution plans. One of the main advantages of mutual funds
is the low cost to invest. At redemption, there are also several plans from which to choose.
Mutual Fund Advantage: Liquidity - Answer -mutual fund shareholders have a continuing right
to redeem shares for cash at net asset value. National Instrument 81-102 requires that
payments be made within two business days after the date of calculation of the net asset value
used in establishing the redemption price.
Mutual Fund Advantage: Ease Of Estate Planning - Answer -shares or units in a mutual fund
continue to be professionally managed during the probate period until estate assets are
distributed.
Mutual Fund Advantage: Loan Collateral And Margin Eligibility - Answer -fund shares or units
are usually accepted as security for a bank loan. They are also acceptable for margin purposes,
thus giving aggressive fund buyers both the benefits and risks of leverage in their financial
planning.
Mutual Fund Advantage: Various Special Options - Answer -mutual funds consist of not only
an underlying portfolio of securities, but also a package of customer services. Most mutual
funds offer the opportunity to compound an investment through the reinvestment of dividends.
-sponsors of mutual funds file a variety of reports annually to meet their regulatory disclosure
requirements. These reports include the annual information form (AIF), audited annual and
interim financial statements and an annual report, among others. The reports must be provided
to unitholders or any person on request. They are easily retrieved through SEDAR (the System
for Electronic Document Analysis and Retrieval)
Chapter 10-11: Conservative MF-
Questions and All Correct Answers
2026-2027 Updated.
Mutual Fund - Answer -an investment vehicle operated by an investment company that pools
contributions from investors and invests these proceeds into a variety of securities, including
stocks, bonds and money market instruments
-individuals who contribute money become share or unitholders in the fund and share in the
income, gains, losses and expenses the fund incurs in proportion to the number of units or
shares that they own.
-professional money managers manage the assets of the fund by investing the proceeds
according to the fund's policies and objectives and based on a particular investing style
Net Asset Value Per Share (NAVPS) or Net Asset Value Per Unit (NAVPU) - Answer -Mutual
fund shares/units are redeemable on demand at the fund's current price or (NAVPS) or
(NAVPU), which depends on the market value of the fund's portfolio of securities at that time
Prospectus - Answer -states a funds prime investment goals
-covers the degree of safety or risk that is acceptable
-whether income or capital gain is the prime objective
-the main types of securities in the fund's investment portfolio
Advantages of Mutual Funds - Answer -low-cost professional management
-diversification
-variety of types of funds and transferability
-variety of purchase and redemption plans
-liquidity
-ease of estate planning
-loan collateral and margin eligibility
-various special options
Mutual Fund Advantage: Low-Cost Professional Management - Answer -the fund manager, an
investment specialist, manages the fund's investment portfolio on a continuing basis. This is an
inexpensive way for the small investor to access professional management of their investments
when they do not have the time, knowledge or expertise to monitor their portfolio of securities
-the fund manager fine-tunes the fund's asset mix as market conditions change.
, Mutual Fund Advantage: Diversification - Answer -a typical large fund might have a portfolio
consisting of 60 to 100 or more different securities in 15 to 20 industries. For the individual
investor, acquiring such a portfolio of stocks is likely not feasible. Because individual accounts
are pooled, sponsors of managed products enjoy economies of scale that can be shared with
mutual fund share or unit holders.
-managed funds can trade more economically than the individual investor. Thus, fund
ownership provides a low-cost way for small investors to acquire a diversified portfolio.
Mutual Fund Advantage: Variety Of Types Of Funds And Transferability - Answer -the
availability of a wide range of mutual funds enables investors to meet a wide range of objectives
(i.e., from fixed-income funds through to aggressive equity funds).
-many fund families also permit investors to transfer between two or more different funds being
managed by the same sponsor, usually at little or no added fee.
Mutual Fund Advantage: Variety Of Purchase And Redemption Plans - Answer -there are many
purchase plans, ranging from one-time, lump-sum purchases to regular purchases in small
amounts under pre-authorized contribution plans. One of the main advantages of mutual funds
is the low cost to invest. At redemption, there are also several plans from which to choose.
Mutual Fund Advantage: Liquidity - Answer -mutual fund shareholders have a continuing right
to redeem shares for cash at net asset value. National Instrument 81-102 requires that
payments be made within two business days after the date of calculation of the net asset value
used in establishing the redemption price.
Mutual Fund Advantage: Ease Of Estate Planning - Answer -shares or units in a mutual fund
continue to be professionally managed during the probate period until estate assets are
distributed.
Mutual Fund Advantage: Loan Collateral And Margin Eligibility - Answer -fund shares or units
are usually accepted as security for a bank loan. They are also acceptable for margin purposes,
thus giving aggressive fund buyers both the benefits and risks of leverage in their financial
planning.
Mutual Fund Advantage: Various Special Options - Answer -mutual funds consist of not only
an underlying portfolio of securities, but also a package of customer services. Most mutual
funds offer the opportunity to compound an investment through the reinvestment of dividends.
-sponsors of mutual funds file a variety of reports annually to meet their regulatory disclosure
requirements. These reports include the annual information form (AIF), audited annual and
interim financial statements and an annual report, among others. The reports must be provided
to unitholders or any person on request. They are easily retrieved through SEDAR (the System
for Electronic Document Analysis and Retrieval)
