[2024] Pass CIFC Exam – Real Questions & Answers [Q62-Q78]

NO.62 While assessing the suitability of an investment recommendation as a Dealing Representative, which statement applies to the “Client’s Interest First” standard?

Presenting a fund’s historical investment performance to anticipate a mutual fund’s future rate of return.

Clarifying for clients the costs and fees associated with mutual funds and how they impact investment performance.

The use of a risk-based approach when determining which mutual fund to recommend to the client.

Accurately document Know Your Client information (KYC) so there is evidence to support a recommendation.

NO.63 Which of the following statement about Exchange Traded Funds (ETFs) is TRUE?

Usually the market price of an ETF is the net asset value per unit (NAVPU) of the Fund on that day.

Investors may sell their ETFs in the stock market or redeem them through the Fund at the NAVPU of the day.

ETFs have lower MERs compared to mutual funds.

All ETFs are actively managed.

NO.64 Stan, a portfolio manager, is looking at two steel companies as potential investments. Truesteel Inc. has a current ratio of 2:1 while Strongco Ltd. has a current ratio of 0.8:1.
What could this information indicate?

It appears that Truesteel is more profitable than Strongco.

Truesteel is better able to meet its short term financial obligations than Strongco.

The stock market is more optimistic about the prospects for Truesteel than Strongco.

Stronqco is reiving less on debt financing than Truesteel.

NO.65 Which of the followings describes segregated funds?

Segregated funds have high returns, high management fees, and cannot be redeemed until the maturity date of the contract.

Segregated funds flow through capital losses to investors because the investors are the owners of the underlying fund.

Segregated funds offer some protection of the capital invested but there is an added cost for the protection.

Segregated funds are subject to securities regulation because they are distributed by mutual fund dealing representatives.

NO.66 Stan, a portfolio manager, is looking at two steel companies as potential investments. Truesteel Inc. has a current ratio of 2:1 while Strongco Ltd. has a current ratio of 0.8:1.
What could this information indicate?

It appears that Truesteel is more profitable than Strongco.

Truesteel is better able to meet its short-term financial obligations than Strongco.

The stock market is more optimistic about the prospects for Truesteel than Strongco.

Stronqco is reiving less on debt financing than Truesteel.

NO.67 Which statement regarding the underwriting process and over-the-counter (OTC) markets is CORRECT?

Corporations must have their shares listed both on an exchange and the OTC market during the underwriting process.

During the underwriting process investment bankers raise investment capital from investors on behalf of corporations and governments issuing securities.

Many new stock issues that are underwritten by securities firms are first listed on a stock exchange before they are sold over-the-counter.

The disclosure standards for stock exchanges are not as stringent as those imposed by the OTC market.

NO.68 Jonathan is a Dealing Representative who has just finished an appointment with his new client, Shirley.
Jonathan has concluded that Shirley has a low-risk profile but wants to establish additional savings of
$500,000. During their discussion, Shirley emphasizes she wants investments that are also tax efficient.
Jonathan learned that currently Shirley has no registered retirement savings plan (RRSP) and tax-free savings account (TFSA) contribution room due to using those opportunities by investmenting elsewhere.
What variable is a PRIMARY consideration for Jonathan when making an investment recommendation?

Investment objective

Shirley’s risk profile.

Expected time horizon.

The tax consequences.

NO.69 Which of the following best describes implied needs of your clients?

They are needs reflected by statements made by clients regarding problems and dissatisfactions.

They are statements made by you showing readiness to solve a client’s problem.

They are statements made by clients expressing the desire for lower commissions.

They are statements of wants and needs made by clients.

NO.70 At the close of business, Great Lengths Equity Fund had total assets of $135 million and total liabilities of $10 million. They had 11 million units outstanding. In addition, their current assets totalled $13 million and current liabilities were $3 million. Which of the following statements regarding Great Lengths Equity Fund’s net asset value per unit (NAVPU) is correct?

The NAVPU is the total liabilities divided by the number of outstanding units.

Current assets and current liabilities are used in the NAVPU calculation.

There is not enough information available to calculate the NAVPU.

Great Lengths Equity Fund’s NAVPU is $11.36.

NO.71 Quintin has been a Dealing Representative for Global Maximum Financial for 5 years. Today, he opened an account for his new client, Reginald. In addition to opening a new account, Reginald agreed to accept Quintin’s investment recommendation and placed a purchase order to buy units of the Global Maximum Value Equity fund.
Quintin informed his Branch Manager Lupita about this new account on the same day the purchase order was received. Lupita told Quintin that she would complete her review of the New Client Application Form (NCAF) by no later than tomorrow.
Which statement regarding this new account opening is CORRECT?

Quintin cannot accept purchase orders from a client until Lupita completes her review of the NCAF.

Lupita has two business days from the date of opening the new account to approve the NCAF completed by Quintin.

Quintin and Lupita are both following proper procedure regarding new account openings and purchase orders.

Unless Quintin is presently under probation, he does not need Lupita’s approval regarding the NCAF.

NO.72 Jabir recently joined Prosper Wealth Inc. and is looking forward to being a Dealing Representative for the firm. Which of the following statements CORRECTLY describe when Jabir will be eligible to open new client accounts and sell investments?

Upon registration application by the dealer

Upon employment with the dealer

Upon formal confirmation from the regulator

Upon passing the proficiency course

NO.73 Greg, one of your clients, has been advised by a friend to invest in open-end mutual funds. He is not sure about the differences between open and closed-end funds.
What would you tell Greg about open-end funds?

The number of units is not fixed, and varies with investor demand and redemption orders.

Investors holding open-end funds can buy and sell their mutual funds anytime the stock market is open.

Units are bought and sold amongst the unitholders.

Initial shares in the mutual fund are allotted through an initial public offering (IPO)

NO.74 Justin and Yvonne both open a Registered Education Savings Plan (RESP) for their daughter Grace. They plan to regularly contribute $1,000 per year until Grace reaches the age of 17.
Which of the following statements relating to RESP is CORRECT?

Justin and Yvonne may contribute a combined lifetime maximum of $50,000 for Grace.

RESPs are attractive to Justin and Yvonne because they are tax-free investment plans.

There is an annual contribution limit of $2,500 that Justin and Yvonne can contribute to an RESP.

Contributions made by Justin and Yvonne are eligible for a tax deduction in the year they are contributed.

NO.75 Which of the following statements about registered education savings plans (RESPs) is CORRECT?

Contributions to RESPs are tax deductible.

There is a yearly contribution limit per beneficiary.

RESPs must be collapsed by the end of the 31st year of its starting date

Contributed funds grow tax-free within the plan.

NO.76 Lior is considering an investment that gains exposure to companies that trade on the Toronto Stock Exchange (TSX). He is not sure what the differences are between a Canadian equity fund and a Canadian dividend fund.
What would you tell him?

Equity funds are more appropriate than dividend funds if Lior requires a steady flow of income.

Dividend funds generate tax-preferred income while income from equity funds is fully taxable.

Dividend funds tend to be less volatile and lower risk than equity funds.

Equity funds hold common shares while dividend funds hold only preferred shares.

NO.77 Your client, James, would like to work beyond the normal retirement age. He comes to you for advice on his registered retirement savings plan (RRSP). What are the rules regarding terminating an RRSP?

James must terminate the plan by the end of the year he turns 65.

James must terminate the plan by the end of the year he turns 67.

James must terminate the plan by the end of the year he turns 70.

James must terminate the plan by the end of the year he turns 71.

NO.78 Josephine is a Dealing Representative with Sunshine Mutual Funds Inc. for over 10 years. Her brother Jonathan has an account with Sunshine Mutual Funds Inc., too. Jonathan wants Josephine to manage his portfolio and make investment decisions on his behalf. Jonathan trusts his sister to make better investment choices than he can. He also wants to give Power of Attorney (POA) to Josephine so she can have full authority over his account.
How can Josephine respond to her brother’s request?

Josephine can accept a limited POA.

Josephine cannot accept the POA as she is not the immediate family.

Josephine can accept the POA as it is an exception that is permitted under the MFDA rules.

Josephine should accept the POA after making a full disclosure to her dealer about the POA.

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