IFIC Exam Study Guide Questions with
Actual Detailed Answers 2026-2027
Updated.
holding period return - Answer A transactional rate of return measure that takes into account
all cash
account closing fees - Answer A charge levied by some mutual funds when clients close their
accounts.
accredited investor - Answer 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.
accumulation plan - Answer A plan offered by a mutual fund company that enables investors
to make automatic periodic purchases of units of a particular mutual fund.
acquisition fee - Answer See Front-end Load.
active portfolio management - Answer 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.
adjusted cost base - Answer The deemed cost of an asset representing the sum of the amount
originally paid plus any additional costs, such as brokerage fees and commissions.
administrative bodies - Answer 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.
alpha - Answer 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.
alternative managed products - Answer 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).
,annuity - Answer 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.
appraisal firms - Answer Firms that engage in the business of collecting mutual fund
performance information and report this information on a regular basis.
arbitrage transactions - Answer The simultaneous purchase and sale of securities traded on
different exchanges.
arithmetic mean - Answer A somewhat inaccurate method of calculating average annual
return. It involves adding up the annual returns and dividing by the number of years.
arrears - Answer 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.
ask price - Answer The lowest price at which a seller will accept for the financial instrument
being quoted.
asset allocation - Answer The weight of the various components (cash, debt, equity, and
money market securities) of an investor's portfolio.
assets - Answer All things of value that are owned by a firm or individual.
Amortization - Answer 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.
amortization period - Answer The period during which the entire principal amount of a
mortgage loan is to be repaid to the mortgagee.
amortized cost - Answer This cost reflects the fact that mortgages might have entered the
portfolio when the market rate for them was different from their fixed rate.
Annual Information Form (AIF) - Answer A document that contains information not included in
a simplified prospectus or annual financial statements.
annuitant - Answer The person on whose life insurance benefits are based.
,assets under management (AUM) - Answer The assets managed by an investment firm.
auction market - Answer 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.
audit - Answer 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).
auditor's report - Answer An independent report on the accuracy and validity of a company's
financial statements.
Autorité des marchés financiers (AMF) - Answer 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.
availability bias - Answer A method that allows people to estimate the probability of an
outcome based on how prevalent or familiar that outcome appears in their lives.
average - Answer A statistical tool used to measure the direction of the market. The most
common average is the Dow Jones Industrial Average.
average annual return - Answer The average of the simple annual returns earned on an
investment over a given number of years.
balance of payments - Answer 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.
balanced mutual funds - Answer 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.
bank rate - Answer The minimum rate at which the Bank of Canada will lend money on a
short- term basis to the chartered banks and other members of Payments Canada in its role as
lender of last resort.
basis point - Answer A unit equal to 1/100 of 1%.
, bear market - Answer A sustained decline in equity prices. Bear markets are usually associated
with a downturn (recession or contraction) in the business cycle.
bearer bond - Answer A bond that is not registered in the name of a particular investor and
can be negotiated by any holder.
behavioural biases - Answer Systematic errors in financial judgment or imperfections in the
perception of economic reality.
benchmark index - Answer An index that reflects a mutual fund's investment universe and can
be used as a standard against which performance can be measured.
beneficiary - Answer The person who will receive the benefits payable under the contract
upon death of the annuitant.
best practical allocation - Answer An asset allocation where the risk and return levels are
adjusted based upon a client's behavioural tendencies. A best practical allocation may slightly
underperform over the long term, but is an allocation that the client can comfortably adhere to
over the long run.
beta - Answer The standard measure of market risk. It shows how much a security or a
portfolio fluctuates when the market as a whole fluctuates.
biases - Answer Personal beliefs that may lead to irrational or emotional choices and
decisions.
bid price - Answer The highest price at which a buyer will pay for the financial instrument
being quoted.
board of directors - Answer Those that hold the ultimate responsibility for a mutual fund's
activities, ensuring that the investments are in keeping with the fund's investment objectives.
bond - Answer A bond is a debt security that may be issued by either a government or a
corporation. The issuer of a bond promises to pay a stipulated rate of interest (coupon rate) and
to pay back the principal or par value at maturity.
bond fund - Answer A fixed-income fund that invests principally in government and corporate
bonds.
Actual Detailed Answers 2026-2027
Updated.
holding period return - Answer A transactional rate of return measure that takes into account
all cash
account closing fees - Answer A charge levied by some mutual funds when clients close their
accounts.
accredited investor - Answer 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.
accumulation plan - Answer A plan offered by a mutual fund company that enables investors
to make automatic periodic purchases of units of a particular mutual fund.
acquisition fee - Answer See Front-end Load.
active portfolio management - Answer 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.
adjusted cost base - Answer The deemed cost of an asset representing the sum of the amount
originally paid plus any additional costs, such as brokerage fees and commissions.
administrative bodies - Answer 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.
alpha - Answer 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.
alternative managed products - Answer 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).
,annuity - Answer 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.
appraisal firms - Answer Firms that engage in the business of collecting mutual fund
performance information and report this information on a regular basis.
arbitrage transactions - Answer The simultaneous purchase and sale of securities traded on
different exchanges.
arithmetic mean - Answer A somewhat inaccurate method of calculating average annual
return. It involves adding up the annual returns and dividing by the number of years.
arrears - Answer 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.
ask price - Answer The lowest price at which a seller will accept for the financial instrument
being quoted.
asset allocation - Answer The weight of the various components (cash, debt, equity, and
money market securities) of an investor's portfolio.
assets - Answer All things of value that are owned by a firm or individual.
Amortization - Answer 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.
amortization period - Answer The period during which the entire principal amount of a
mortgage loan is to be repaid to the mortgagee.
amortized cost - Answer This cost reflects the fact that mortgages might have entered the
portfolio when the market rate for them was different from their fixed rate.
Annual Information Form (AIF) - Answer A document that contains information not included in
a simplified prospectus or annual financial statements.
annuitant - Answer The person on whose life insurance benefits are based.
,assets under management (AUM) - Answer The assets managed by an investment firm.
auction market - Answer 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.
audit - Answer 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).
auditor's report - Answer An independent report on the accuracy and validity of a company's
financial statements.
Autorité des marchés financiers (AMF) - Answer 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.
availability bias - Answer A method that allows people to estimate the probability of an
outcome based on how prevalent or familiar that outcome appears in their lives.
average - Answer A statistical tool used to measure the direction of the market. The most
common average is the Dow Jones Industrial Average.
average annual return - Answer The average of the simple annual returns earned on an
investment over a given number of years.
balance of payments - Answer 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.
balanced mutual funds - Answer 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.
bank rate - Answer The minimum rate at which the Bank of Canada will lend money on a
short- term basis to the chartered banks and other members of Payments Canada in its role as
lender of last resort.
basis point - Answer A unit equal to 1/100 of 1%.
, bear market - Answer A sustained decline in equity prices. Bear markets are usually associated
with a downturn (recession or contraction) in the business cycle.
bearer bond - Answer A bond that is not registered in the name of a particular investor and
can be negotiated by any holder.
behavioural biases - Answer Systematic errors in financial judgment or imperfections in the
perception of economic reality.
benchmark index - Answer An index that reflects a mutual fund's investment universe and can
be used as a standard against which performance can be measured.
beneficiary - Answer The person who will receive the benefits payable under the contract
upon death of the annuitant.
best practical allocation - Answer An asset allocation where the risk and return levels are
adjusted based upon a client's behavioural tendencies. A best practical allocation may slightly
underperform over the long term, but is an allocation that the client can comfortably adhere to
over the long run.
beta - Answer The standard measure of market risk. It shows how much a security or a
portfolio fluctuates when the market as a whole fluctuates.
biases - Answer Personal beliefs that may lead to irrational or emotional choices and
decisions.
bid price - Answer The highest price at which a buyer will pay for the financial instrument
being quoted.
board of directors - Answer Those that hold the ultimate responsibility for a mutual fund's
activities, ensuring that the investments are in keeping with the fund's investment objectives.
bond - Answer A bond is a debt security that may be issued by either a government or a
corporation. The issuer of a bond promises to pay a stipulated rate of interest (coupon rate) and
to pay back the principal or par value at maturity.
bond fund - Answer A fixed-income fund that invests principally in government and corporate
bonds.
