IFSE - CIFC Practice Questions and Answers

IFSE - CIFC PRACTICE QUESTIONS AND ANSWERS 1. To whom are you permitted to make an unsolicited telephone call to market new products ("cold-call") if they have signed up on the National Do Not Call List (DNCL)? someone with whom you already have a business relationship 2. Which of the following statements about Mutual Fund Dealers Association of Canada (MFDA) is CORRECT? It is a self-regulatory organization for the distribution side of the Canadian mutual funds industry. 3. What is the role of the Ombudsman for Banking and Investments (OBSI)? OBSI helps resolve disputes between participating banking services and investment firms and their clients. 4. Jeff Thomson is a newly licensed dealing representative. He has received a cash deposit of $12,000 and would like you to guide him as to whether he is required to report the transaction to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). What is the minimum dollar amount of a cash deposit that Jeff is required to report to FINTRAC? $10,000 5. Which of the following dealing representatives is in a conflict of interest situation? Jonathan, who recommends mutual funds to his clients based on which funds pay the highest commission. 6. Which of the following statements regarding ethical conduct is true? Ethical conduct means conforming to approved standards. 7. The Mutual Fund Dealers Association of Canada (MFDA) has several rules dealing with different aspects of the mutual fund business. Conduct Rule 2 offers details on how both you and your employer are to carry out business. Which of the following is covered in Rule 2? standard of conduct for ethical behaviour 8. Josephine is a newly registered dealing representative. Which of the following actions constitute proper conduct expected of her? Protecting the confidentiality of client information. 9. Which statement about the registration process is TRUE? Objections to your registration may be due to unacceptable past employment history in the securities industry. 10. Which of the following statements is TRUE? All unethical actions are breaches of the standard of conduct. 11. Under Mutual Fund Dealers Association of Canada (MFDA) Rules you have the duty to disclose which of the following? outside business activities 12. Sarah, a mutual fund dealing representative, was reviewing the features and characteristics of an emerging markets mutual fund that she was considering for a client. Based on her client's objectives and risk profile, Sarah thought it would be a suitable investment. If Sarah makes the following statements, in which instance would she be following best practices as a mutual funds dealing representative? "The prospectus indicates that this is a speculative fund that is suitable for investors with a growth objective and a high risk tolerance." 13. Today is Sheldon's first day as a dealing representative. He is in the process of opening an account for his client. He is not sure of how to furnish the relationship disclosures to his first client. How should Sheldon provide the relationship disclosures required under the Client Relationship Model (CRM)? Disclosures should be provided in writing to the client on the account opening form or on a separate form. 14. Your clients , Ravi and Nuzah Patel, both 30 years of age, recently married. Ravi earns an annual salary of $55,000 as an X-ray technician. Nuzah earns $72,000 per year as a pharmacist. They are currently viewing houses in the $200,000-to-$225,000 price range and hope to purchase a house within the next year. They plan to use their wedding gifts of cash totalling $12,000 as a down payment. What is the Patels' investment objective for the $12,000 in cash? capital preservation 15. Gilles and Marielle Lachette, both 59, are the lucky winners of the latest home lottery sponsored by their local children's hospital. The Lachettes sold their prize and received $500,000 in cash after transaction costs. They have decided to use this money to retire early within two years. Since the money will be used to supplement their retirement, they do not want to take on unnecessary risk. Gilles is a city bus driver earning $49,000. Marielle works as a bookkeeper, earning $35,000 annually. The Lachettes have paid down the mortgage on their home, which is now worth $200,000. Their two children, now grown, have good jobs and are financially independent. The only financial asset they own is an RRSP in Marielle's name worth $78,000. The RRSP holds five guaranteed investment certificates (GICs) with maturities between one to five years. Given that the Lachettes have no investment knowledge or experience, they req low tolerance for risk