IFIC Course Summary: Investment Funds in Canada –
Complete Guide
A transactional rate of return measure that takes into account all cash - correct answer
✔✔holding period return
A charge levied by some mutual funds when clients close their accounts. - correct answer
✔✔account closing fees
An individual or institutional investor who meets certain minimum requirement relating to
income, net worth, or investment knowledge. Also referred to as a sophisticated investor. -
correct answer ✔✔accredited investor
A plan offered by a mutual fund company that enables investors to make automatic periodic
purchases of units of a particular mutual fund. - correct answer ✔✔accumulation plan
See Front-end Load. - correct answer ✔✔acquisition fee
An investment management style employed by managers who believe that financial markets
present occasional inefficiencies which can be exploited to earn excess returns. Proponents of
this approach will try to add value through strategies such as market timing and individual
security selection. - correct answer ✔✔active portfolio management
The deemed cost of an asset representing the sum of the amount originally paid plus any
additional costs, such as brokerage fees and commissions. - correct answer ✔✔adjusted cost
base
Provincial and territorial securities administrators such as securities commissions or other
regulatory bodies that operate within the provincial and territorial governments. Powers and
,operations include registration, disclosure, and investigation and prosecution. - correct answer
✔✔administrative bodies
A statistical measure of the value a fund manager adds to the performance of the fund
managed. If alpha is positive, the manager has added value to the portfolio. If the alpha is
negative, the manager has underperformed the market. - correct answer ✔✔alpha
Professionally managed portfolios of basic asset classes and/or commodities and include
segregated funds, hedge funds, commodity pools, exchange- traded funds, income, trusts,
closed- end funds and principal protected notes (PPN). - correct answer ✔✔alternative
managed products
A sum of money invested with a life insurance company that is paid out to the investor based on
a predetermined formula. The annual payouts are composed of both the initial amount invested
and returns generated. - correct answer ✔✔annuity
Firms that engage in the business of collecting mutual fund performance information and report
this information on a regular basis. - correct answer ✔✔appraisal firms
The simultaneous purchase and sale of securities traded on different exchanges. - correct
answer ✔✔arbitrage transactions
A somewhat inaccurate method of calculating average annual return. It involves adding up the
annual returns and dividing by the number of years. - correct answer ✔✔arithmetic mean
Interest or dividends that were not paid when due but are still owed. For example, dividends
owed but not paid to cumulative preferred shareholders accumulate in a separate account
(arrears). When payments resume, dividends in arrears must be paid to the preferred
shareholders before the common shareholders. - correct answer ✔✔arrears
,The lowest price at which a seller will accept for the financial instrument being quoted. - correct
answer ✔✔ask price
The weight of the various components (cash, debt, equity, and money market securities) of an
investor's portfolio. - correct answer ✔✔asset allocation
All things of value that are owned by a firm or individual. - correct answer ✔✔assets
Gradually writing off the value of an intangible asset over a period of time. Commonly applied
to items such as goodwill, improvements to leased premises, or expenses of a new stock or
bond issue. - correct answer ✔✔Amortization
The period during which the entire principal amount of a mortgage loan is to be repaid to the
mortgagee. - correct answer ✔✔amortization period
This cost reflects the fact that mortgages might have entered the portfolio when the market rate
for them was different from their fixed rate. - correct answer ✔✔amortized cost
A document that contains information not included in a simplified prospectus or annual
financial statements. - correct answer ✔✔Annual Information Form (AIF)
The person on whose life insurance benefits are based. - correct answer ✔✔annuitant
The assets managed by an investment firm. - correct answer ✔✔assets under management
(AUM)
Market in which securities are bought and sold by brokers acting as agents for their clients, in
contrast to a dealer market where trades are conducted over-the-counter. For example, the
Toronto Stock Exchange is an auction market. - correct answer ✔✔auction market
, A professional review and examination of a company's financial statements required under
corporate law for the purpose of ensuring that the statements are fair, consistent and conform
with International Financial Reporting Standards (IFRS). - correct answer ✔✔audit
An independent report on the accuracy and validity of a company's financial statements. -
correct answer ✔✔auditor's report
The body that administers the regulatory framework surrounding Québec's financial sector:
securities sector, the distribution of financial products and services sector, the financial
institutions sector and the compensation sector. - correct answer ✔✔Autorité des marchés
financiers (AMF)
A method that allows people to estimate the probability of an outcome based on how prevalent
or familiar that outcome appears in their lives. - correct answer ✔✔availability bias
A statistical tool used to measure the direction of the market. The most common average is the
Dow Jones Industrial Average. - correct answer ✔✔average
The average of the simple annual returns earned on an investment over a given number of
years. - correct answer ✔✔average annual return
Accounts maintained by a country to record international activities, such as foreign trade and
international borrowing and lending. Balance of payments accounts actually comprise two
separate accounts: the Current account and the Capital account. - correct answer ✔✔balance of
payments
Hold a diversified portfolio of different types of securities: bonds, stocks, and money market
securities. Often, the fund manager will vary the proportions depending on market conditions. -
correct answer ✔✔balanced mutual funds
Complete Guide
A transactional rate of return measure that takes into account all cash - correct answer
✔✔holding period return
A charge levied by some mutual funds when clients close their accounts. - correct answer
✔✔account closing fees
An individual or institutional investor who meets certain minimum requirement relating to
income, net worth, or investment knowledge. Also referred to as a sophisticated investor. -
correct answer ✔✔accredited investor
A plan offered by a mutual fund company that enables investors to make automatic periodic
purchases of units of a particular mutual fund. - correct answer ✔✔accumulation plan
See Front-end Load. - correct answer ✔✔acquisition fee
An investment management style employed by managers who believe that financial markets
present occasional inefficiencies which can be exploited to earn excess returns. Proponents of
this approach will try to add value through strategies such as market timing and individual
security selection. - correct answer ✔✔active portfolio management
The deemed cost of an asset representing the sum of the amount originally paid plus any
additional costs, such as brokerage fees and commissions. - correct answer ✔✔adjusted cost
base
Provincial and territorial securities administrators such as securities commissions or other
regulatory bodies that operate within the provincial and territorial governments. Powers and
,operations include registration, disclosure, and investigation and prosecution. - correct answer
✔✔administrative bodies
A statistical measure of the value a fund manager adds to the performance of the fund
managed. If alpha is positive, the manager has added value to the portfolio. If the alpha is
negative, the manager has underperformed the market. - correct answer ✔✔alpha
Professionally managed portfolios of basic asset classes and/or commodities and include
segregated funds, hedge funds, commodity pools, exchange- traded funds, income, trusts,
closed- end funds and principal protected notes (PPN). - correct answer ✔✔alternative
managed products
A sum of money invested with a life insurance company that is paid out to the investor based on
a predetermined formula. The annual payouts are composed of both the initial amount invested
and returns generated. - correct answer ✔✔annuity
Firms that engage in the business of collecting mutual fund performance information and report
this information on a regular basis. - correct answer ✔✔appraisal firms
The simultaneous purchase and sale of securities traded on different exchanges. - correct
answer ✔✔arbitrage transactions
A somewhat inaccurate method of calculating average annual return. It involves adding up the
annual returns and dividing by the number of years. - correct answer ✔✔arithmetic mean
Interest or dividends that were not paid when due but are still owed. For example, dividends
owed but not paid to cumulative preferred shareholders accumulate in a separate account
(arrears). When payments resume, dividends in arrears must be paid to the preferred
shareholders before the common shareholders. - correct answer ✔✔arrears
,The lowest price at which a seller will accept for the financial instrument being quoted. - correct
answer ✔✔ask price
The weight of the various components (cash, debt, equity, and money market securities) of an
investor's portfolio. - correct answer ✔✔asset allocation
All things of value that are owned by a firm or individual. - correct answer ✔✔assets
Gradually writing off the value of an intangible asset over a period of time. Commonly applied
to items such as goodwill, improvements to leased premises, or expenses of a new stock or
bond issue. - correct answer ✔✔Amortization
The period during which the entire principal amount of a mortgage loan is to be repaid to the
mortgagee. - correct answer ✔✔amortization period
This cost reflects the fact that mortgages might have entered the portfolio when the market rate
for them was different from their fixed rate. - correct answer ✔✔amortized cost
A document that contains information not included in a simplified prospectus or annual
financial statements. - correct answer ✔✔Annual Information Form (AIF)
The person on whose life insurance benefits are based. - correct answer ✔✔annuitant
The assets managed by an investment firm. - correct answer ✔✔assets under management
(AUM)
Market in which securities are bought and sold by brokers acting as agents for their clients, in
contrast to a dealer market where trades are conducted over-the-counter. For example, the
Toronto Stock Exchange is an auction market. - correct answer ✔✔auction market
, A professional review and examination of a company's financial statements required under
corporate law for the purpose of ensuring that the statements are fair, consistent and conform
with International Financial Reporting Standards (IFRS). - correct answer ✔✔audit
An independent report on the accuracy and validity of a company's financial statements. -
correct answer ✔✔auditor's report
The body that administers the regulatory framework surrounding Québec's financial sector:
securities sector, the distribution of financial products and services sector, the financial
institutions sector and the compensation sector. - correct answer ✔✔Autorité des marchés
financiers (AMF)
A method that allows people to estimate the probability of an outcome based on how prevalent
or familiar that outcome appears in their lives. - correct answer ✔✔availability bias
A statistical tool used to measure the direction of the market. The most common average is the
Dow Jones Industrial Average. - correct answer ✔✔average
The average of the simple annual returns earned on an investment over a given number of
years. - correct answer ✔✔average annual return
Accounts maintained by a country to record international activities, such as foreign trade and
international borrowing and lending. Balance of payments accounts actually comprise two
separate accounts: the Current account and the Capital account. - correct answer ✔✔balance of
payments
Hold a diversified portfolio of different types of securities: bonds, stocks, and money market
securities. Often, the fund manager will vary the proportions depending on market conditions. -
correct answer ✔✔balanced mutual funds
