IFIC Certification Guide: Full Course Overview for
Success
holding period return - correct answer ✔✔A transactional rate of return measure that takes into
account all cash
account closing fees - correct answer ✔✔A charge levied by some mutual funds when clients
close their accounts.
accredited investor - correct 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 - correct 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 - correct answer ✔✔See Front-end Load.
active portfolio management - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 - correct answer ✔✔Firms that engage in the business of collecting mutual fund
performance information and report this information on a regular basis.
arbitrage transactions - correct answer ✔✔The simultaneous purchase and sale of securities
traded on different exchanges.
arithmetic mean - correct 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 - correct 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 - correct answer ✔✔The lowest price at which a seller will accept for the financial
instrument being quoted.
,asset allocation - correct answer ✔✔The weight of the various components (cash, debt, equity,
and money market securities) of an investor's portfolio.
assets - correct answer ✔✔All things of value that are owned by a firm or individual.
Amortization - correct 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 - correct answer ✔✔The period during which the entire principal amount
of a mortgage loan is to be repaid to the mortgagee.
amortized cost - correct 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) - correct answer ✔✔A document that contains information not
included in a simplified prospectus or annual financial statements.
annuitant - correct answer ✔✔The person on whose life insurance benefits are based.
assets under management (AUM) - correct answer ✔✔The assets managed by an investment
firm.
auction market - correct 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 - correct 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 - correct answer ✔✔An independent report on the accuracy and validity of a
company's financial statements.
Autorité des marchés financiers (AMF) - correct 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 - correct 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 - correct 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 - correct answer ✔✔The average of the simple annual returns earned on
an investment over a given number of years.
balance of payments - correct 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 - correct 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.
Success
holding period return - correct answer ✔✔A transactional rate of return measure that takes into
account all cash
account closing fees - correct answer ✔✔A charge levied by some mutual funds when clients
close their accounts.
accredited investor - correct 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 - correct 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 - correct answer ✔✔See Front-end Load.
active portfolio management - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 - correct answer ✔✔Firms that engage in the business of collecting mutual fund
performance information and report this information on a regular basis.
arbitrage transactions - correct answer ✔✔The simultaneous purchase and sale of securities
traded on different exchanges.
arithmetic mean - correct 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 - correct 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 - correct answer ✔✔The lowest price at which a seller will accept for the financial
instrument being quoted.
,asset allocation - correct answer ✔✔The weight of the various components (cash, debt, equity,
and money market securities) of an investor's portfolio.
assets - correct answer ✔✔All things of value that are owned by a firm or individual.
Amortization - correct 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 - correct answer ✔✔The period during which the entire principal amount
of a mortgage loan is to be repaid to the mortgagee.
amortized cost - correct 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) - correct answer ✔✔A document that contains information not
included in a simplified prospectus or annual financial statements.
annuitant - correct answer ✔✔The person on whose life insurance benefits are based.
assets under management (AUM) - correct answer ✔✔The assets managed by an investment
firm.
auction market - correct 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 - correct 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 - correct answer ✔✔An independent report on the accuracy and validity of a
company's financial statements.
Autorité des marchés financiers (AMF) - correct 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 - correct 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 - correct 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 - correct answer ✔✔The average of the simple annual returns earned on
an investment over a given number of years.
balance of payments - correct 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 - correct 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.
