IFPC – Investment Foundations Professional Certificate |
IFPC – INVESTMENT FOUNDATIONS PROFESSIONAL CERTIFICATE
EXAM QUESTIONS AND CORRECT ANSWERS | 2026/2027
INVESTMENT FOUNDATIONS PROFESSIONAL CERTIFICATE (IFPC)
1. The primary role of the investment industry in an economy is best
described as:
A. Moving capital from those who have savings to those who need funds
for productive use
B. Eliminating risk from financial transactions
C. Setting interest rates for commercial banks
D. Guaranteeing positive returns to every saver
A. Moving capital from those who have savings to those who need
funds for productive use
The industry connects savers with borrowers and issuers, channelling
capital to productive uses across the economy.
2. Which of the following is most likely classified as a sell-side firm?
A. An endowment fund managing university assets
B. A mutual fund purchasing equities
C. An investment bank that underwrites new share issues
D. A pension fund buying bonds for its members
C. An investment bank that underwrites new share issues
Sell-side firms such as investment banks and brokers provide services
and products to buy-side investors.
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, IFPC – Investment Foundations Professional Certificate |
3. A defined benefit pension plan is best described as one in which:
A. Benefits depend solely on the account balance at retirement
B. The employer promises a specified retirement income and bears the
investment risk
C. The employee chooses investments and bears all investment risk
D. Contributions are fixed but payouts are never guaranteed
B. The employer promises a specified retirement income and bears
the investment risk
Under a defined benefit plan, the sponsor carries the risk of meeting the
promised benefit.
4. Which party in the investment chain is most directly responsible for
executing client trades in the secondary market?
A. Custodian
B. Broker
C. Rating agency
D. Auditor
B. Broker
Brokers act as agents, matching buyers and sellers and executing orders
on the client's behalf.
5. The main function of a custodian is to:
A. Select securities for the client's portfolio
B. Issue credit ratings on corporate bonds
C. Write research reports for retail investors
D. Safeguard client assets and handle settlement and record keeping
D. Safeguard client assets and handle settlement and record keeping
Custodians hold assets securely, settle trades, collect income and keep
accurate records.
Page 2 of 54
, IFPC – Investment Foundations Professional Certificate |
6. Which of the following best describes a fiduciary duty?
A. A duty owed only to regulators
B. A requirement to maximise firm profits above all else
C. An obligation to act in the best interest of the client with loyalty and
care
D. A legal duty to guarantee client returns
C. An obligation to act in the best interest of the client with loyalty
and care
Fiduciaries must put clients' interests first and act with prudence and
loyalty.
7. Front-running occurs when an employee:
A. Allocates block trades fairly across client accounts
B. Executes a client order immediately at the best available price
C. Discloses fees before taking on a new client
D. Trades for their own account ahead of a known client order to profit
from the expected price move
D. Trades for their own account ahead of a known client order to
profit from the expected price move
Front-running exploits advance knowledge of client orders and breaches
duty to clients.
8. Insider trading is best described as trading on the basis of:
A. Analyst consensus forecasts
B. Material non-public information
C. Technical chart patterns
D. Publicly released earnings figures
B. Material non-public information
Using material information not yet available to the public is illegal and
unethical.
Page 3 of 54
, IFPC – Investment Foundations Professional Certificate |
9. Which statement about ethics and law is most accurate?
A. Laws are irrelevant once a firm has a code of ethics
B. Ethical behaviour often requires more than mere legal compliance
C. Ethics and law always produce identical outcomes
D. Anything legal is automatically ethical
B. Ethical behaviour often requires more than mere legal compliance
Laws set minimum standards, while ethics may demand higher conduct
than the law requires.
10. A conflict of interest is best managed primarily through:
A. Disclosure and, where necessary, avoidance of the conflicting situation
B. Informing only senior management
C. Charging the client a higher fee
D. Ignoring it if it is small
A. Disclosure and, where necessary, avoidance of the conflicting
situation
Conflicts should be identified, disclosed to affected parties and avoided
where they cannot be managed.
11. Which of the following is the main objective of financial market
regulation?
A. Preventing foreign investment
B. Guaranteeing that no investor ever loses money
C. Protecting investors and maintaining fair, efficient and transparent
markets
D. Fixing prices of listed securities
C. Protecting investors and maintaining fair, efficient and
transparent markets
Regulators aim to protect investors, promote market integrity and reduce
systemic risk.
Page 4 of 54
IFPC – INVESTMENT FOUNDATIONS PROFESSIONAL CERTIFICATE
EXAM QUESTIONS AND CORRECT ANSWERS | 2026/2027
INVESTMENT FOUNDATIONS PROFESSIONAL CERTIFICATE (IFPC)
1. The primary role of the investment industry in an economy is best
described as:
A. Moving capital from those who have savings to those who need funds
for productive use
B. Eliminating risk from financial transactions
C. Setting interest rates for commercial banks
D. Guaranteeing positive returns to every saver
A. Moving capital from those who have savings to those who need
funds for productive use
The industry connects savers with borrowers and issuers, channelling
capital to productive uses across the economy.
2. Which of the following is most likely classified as a sell-side firm?
A. An endowment fund managing university assets
B. A mutual fund purchasing equities
C. An investment bank that underwrites new share issues
D. A pension fund buying bonds for its members
C. An investment bank that underwrites new share issues
Sell-side firms such as investment banks and brokers provide services
and products to buy-side investors.
Page 1 of 54
, IFPC – Investment Foundations Professional Certificate |
3. A defined benefit pension plan is best described as one in which:
A. Benefits depend solely on the account balance at retirement
B. The employer promises a specified retirement income and bears the
investment risk
C. The employee chooses investments and bears all investment risk
D. Contributions are fixed but payouts are never guaranteed
B. The employer promises a specified retirement income and bears
the investment risk
Under a defined benefit plan, the sponsor carries the risk of meeting the
promised benefit.
4. Which party in the investment chain is most directly responsible for
executing client trades in the secondary market?
A. Custodian
B. Broker
C. Rating agency
D. Auditor
B. Broker
Brokers act as agents, matching buyers and sellers and executing orders
on the client's behalf.
5. The main function of a custodian is to:
A. Select securities for the client's portfolio
B. Issue credit ratings on corporate bonds
C. Write research reports for retail investors
D. Safeguard client assets and handle settlement and record keeping
D. Safeguard client assets and handle settlement and record keeping
Custodians hold assets securely, settle trades, collect income and keep
accurate records.
Page 2 of 54
, IFPC – Investment Foundations Professional Certificate |
6. Which of the following best describes a fiduciary duty?
A. A duty owed only to regulators
B. A requirement to maximise firm profits above all else
C. An obligation to act in the best interest of the client with loyalty and
care
D. A legal duty to guarantee client returns
C. An obligation to act in the best interest of the client with loyalty
and care
Fiduciaries must put clients' interests first and act with prudence and
loyalty.
7. Front-running occurs when an employee:
A. Allocates block trades fairly across client accounts
B. Executes a client order immediately at the best available price
C. Discloses fees before taking on a new client
D. Trades for their own account ahead of a known client order to profit
from the expected price move
D. Trades for their own account ahead of a known client order to
profit from the expected price move
Front-running exploits advance knowledge of client orders and breaches
duty to clients.
8. Insider trading is best described as trading on the basis of:
A. Analyst consensus forecasts
B. Material non-public information
C. Technical chart patterns
D. Publicly released earnings figures
B. Material non-public information
Using material information not yet available to the public is illegal and
unethical.
Page 3 of 54
, IFPC – Investment Foundations Professional Certificate |
9. Which statement about ethics and law is most accurate?
A. Laws are irrelevant once a firm has a code of ethics
B. Ethical behaviour often requires more than mere legal compliance
C. Ethics and law always produce identical outcomes
D. Anything legal is automatically ethical
B. Ethical behaviour often requires more than mere legal compliance
Laws set minimum standards, while ethics may demand higher conduct
than the law requires.
10. A conflict of interest is best managed primarily through:
A. Disclosure and, where necessary, avoidance of the conflicting situation
B. Informing only senior management
C. Charging the client a higher fee
D. Ignoring it if it is small
A. Disclosure and, where necessary, avoidance of the conflicting
situation
Conflicts should be identified, disclosed to affected parties and avoided
where they cannot be managed.
11. Which of the following is the main objective of financial market
regulation?
A. Preventing foreign investment
B. Guaranteeing that no investor ever loses money
C. Protecting investors and maintaining fair, efficient and transparent
markets
D. Fixing prices of listed securities
C. Protecting investors and maintaining fair, efficient and
transparent markets
Regulators aim to protect investors, promote market integrity and reduce
systemic risk.
Page 4 of 54
