IFIC Exam (Chapter 11) Questions with
All Solved Solutions 2026-2027 Updated.
Conservative Mutual Fund Product Examples - Answer -money market mutual funds (lowest
return)
-mortgage mutual funds
-bond funds
-other fixed-income mutual fund
Money Market Mutual Funds - Answer -invest at least 95% of their total net assets in money
market securities.
-short term, highly liquid fixed income investments of varying maturities of 364 days or less (so
less than 1 year) that are readily convertible into cash.
-two important differences that distinguish money market fund investments from their
traditional banking counterparts.
-money market investments are not insured by the Canada Deposit Insurance Corporation
(CDIC) or any other insurer.
-money market funds may fluctuate in value with changes in short-term interest rates (not very
sensitive)
-backed by the governments issuing them.
Money Market Fund Investment Objectives - Answer -earn stable returns by investing in short-
term money market securities. These securities include Government of Canada T-bills, T-bills of
other provinces, very-short term government securities other than T-bills, and high-quality
corporate securities such as commercial paper and bankers' acceptances
-term to maturity of these securities is less than one year, and the average term to maturity of a
money market fund must be 90 days or less.
-liquidity
-safety of principle
Risks of Money Market Funds - Answer -a risk associated with long term investing in money
market funds is that these funds sometimes have a return that does not keep pace with
inflation, thus eroding the purchasing power of the investment thus purchasing power risk
-not insured by CIDC
Advantages of Money Market Funds - Answer -low risk (volatility)
-low default risk
-safety of principle
, -liquidity
-stable returns
Money Market Fund Returns - Answer -stable
-lower than T-Bills
-all returns earned on money market funds are considered interest earnings and are taxed as
interest income. No other type of income can be earned
-distribute the earned interest income on a monthly basis.
Money Market Fund Performance Table Information - Answer -performance data
-comparison to the returns of an appropriate index
-sector or asset allocation breakdown
-top 10 holdings and portfolio weights
-a record of distributions
-a profile of the fund manager
-price history and charts
-background information, including management fees, sales fees, RRSP eligibility and minimum
investment amounts
Money Market Fund Performance Data - Answer -performance data for money market funds
are reported slightly differently compared to other types of mutual funds.
-other funds report changes in net asset value per unit, most money market funds assume that
the net asset value per unit is constant at $10 and report the yield currently being earned
-use two yield calculations: the current yield and the effective yield
Current Yield - Answer -the current yield for a money market fund is calculated as the most
recent seven-day yield on the fund, adjusted to an annual rate
-looks only at the return over the most recent seven-day period and ignores what your client
might do with the money if it were paid out, assumes compounding of returns will not take
place
-always lower than effective yield
Effective Yield - Answer -makes the assumption that the yield generated over the last seven
days will remain constant for one year into the future, and that the returns earned weekly are
re-invested in the fund. Thus, weekly compounding of returns at the current rate is assumed
Market Review - Answer -in the market review, the fund manager explains what has happened
to rates, and therefore the performance, of the fund over the recent past, and why
All Solved Solutions 2026-2027 Updated.
Conservative Mutual Fund Product Examples - Answer -money market mutual funds (lowest
return)
-mortgage mutual funds
-bond funds
-other fixed-income mutual fund
Money Market Mutual Funds - Answer -invest at least 95% of their total net assets in money
market securities.
-short term, highly liquid fixed income investments of varying maturities of 364 days or less (so
less than 1 year) that are readily convertible into cash.
-two important differences that distinguish money market fund investments from their
traditional banking counterparts.
-money market investments are not insured by the Canada Deposit Insurance Corporation
(CDIC) or any other insurer.
-money market funds may fluctuate in value with changes in short-term interest rates (not very
sensitive)
-backed by the governments issuing them.
Money Market Fund Investment Objectives - Answer -earn stable returns by investing in short-
term money market securities. These securities include Government of Canada T-bills, T-bills of
other provinces, very-short term government securities other than T-bills, and high-quality
corporate securities such as commercial paper and bankers' acceptances
-term to maturity of these securities is less than one year, and the average term to maturity of a
money market fund must be 90 days or less.
-liquidity
-safety of principle
Risks of Money Market Funds - Answer -a risk associated with long term investing in money
market funds is that these funds sometimes have a return that does not keep pace with
inflation, thus eroding the purchasing power of the investment thus purchasing power risk
-not insured by CIDC
Advantages of Money Market Funds - Answer -low risk (volatility)
-low default risk
-safety of principle
, -liquidity
-stable returns
Money Market Fund Returns - Answer -stable
-lower than T-Bills
-all returns earned on money market funds are considered interest earnings and are taxed as
interest income. No other type of income can be earned
-distribute the earned interest income on a monthly basis.
Money Market Fund Performance Table Information - Answer -performance data
-comparison to the returns of an appropriate index
-sector or asset allocation breakdown
-top 10 holdings and portfolio weights
-a record of distributions
-a profile of the fund manager
-price history and charts
-background information, including management fees, sales fees, RRSP eligibility and minimum
investment amounts
Money Market Fund Performance Data - Answer -performance data for money market funds
are reported slightly differently compared to other types of mutual funds.
-other funds report changes in net asset value per unit, most money market funds assume that
the net asset value per unit is constant at $10 and report the yield currently being earned
-use two yield calculations: the current yield and the effective yield
Current Yield - Answer -the current yield for a money market fund is calculated as the most
recent seven-day yield on the fund, adjusted to an annual rate
-looks only at the return over the most recent seven-day period and ignores what your client
might do with the money if it were paid out, assumes compounding of returns will not take
place
-always lower than effective yield
Effective Yield - Answer -makes the assumption that the yield generated over the last seven
days will remain constant for one year into the future, and that the returns earned weekly are
re-invested in the fund. Thus, weekly compounding of returns at the current rate is assumed
Market Review - Answer -in the market review, the fund manager explains what has happened
to rates, and therefore the performance, of the fund over the recent past, and why
