Dec-2025 Pass Your IFC Exam at the First Try with 100% Real Exam [Q31-Q50]

NO.31 One of your clients, Harry, has heard that he can defer paying tax on capital gains. He wants to know if what he has heard is correct and if so, how to defer paying taxes on capital gains.
What would you tell Harry?

He should hold profitable investments as long as possible.

He should invest in mutual funds just before the dividend paying date to pick up the dividend.

Harry should buy and sell investments actively.

He should hold unprofitable investments as long as possible.

NO.32 What factor is irrelevant if an investor’s primary objective focuses on generating capital gains?

Coupon rate

Risk tolerance

Client knowledge

Time horizon

NO.33 What is an implicit cost of principal protected notes?

Structuring costs and guarantee fees

Performance participation caps

Commissions

Early redemption fees

NO.34 Which statement best describes what a rational investor will do when comparing the risk and return of two investments?

He will select the one that maximizes risk and maximizes return

He will select the one with the lower risk because all investors are risk averse

He will select the one that minimizes risk and maximizes return

He will select the one with the higher expected risk because that is the only way to earn a higher return

NO.35 In which of the following situations would the client mobility exemption apply?

Olaf is a registered dealing representative in Sunnyside, Prince Edward Island. His client Jules is moving to Moncton, New Brunswick. Olaf’s mutual fund dealer is not currently registered in New Brunswick but is in the process of applying there.

Sigrid’s brother-in-law has agreed to be her client. She is a registered dealing representative in Ottawa, Ontario and he lives in Hull, Quebec. Both Sigrid and her mutual fund dealer are currently registered in Quebec.

Although her mutual fund dealer is registered in all provinces and territories, Lori is only registered as a dealing representative in Saskatchewan. Last year, three of Lori’s clients moved to Alberta and now two more are moving to that province. Lori wants to continue servicing these clients.

Karl is a registered dealing representative in Dauphin, Manitoba. 30 of his clients who work for the same company are being relocated to British Columbia. He wants to retain these clients. His mutual fund dealer is registered in British Columbia, but Karl is not.

NO.36 An employee may begin offering mutual fund advice following the completion of which requirement?

Registration as a representative.

Industry-related proficiency courses.

Six-month close supervision.

90-day training program.

NO.37 The owners of Underground Airways Ltd. want to take their privately owned corporation public through an initial public offering (IPO). They are speaking to a specialist from an investment dealer to determine whether it would be advisable to become listed on a stock exchange or the over-the-counter (OTC) market.
In comparing the two options, which of the following considerations is TRUE?

Underground would be subject to less stringent listing requirements if they chose the stock exchange as compared to the OTC market.

If Underground chose to list on the OTC market, there would be no secondary market available for investors.

Underground would still be directly involved in the trading of their shares on either market.

A stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market.

NO.38 With respect to the tax treatment of dividends received from a taxable Canadian corporation, which of the following statements is CORRECT?

Dividends are taxed the same way interest income is taxed.

Dividends from both preferred and common shares of Canadian corporations receive preferential tax treatment.

Dividends from non-resident corporations receive preferential tax treatment.

Only 50% of dividend income is subject to tax.

NO.39 You ask a new client, Brad, “what are your financial obligations and what are your assets?” What information are you trying to gather in order to comply with the know your client (KYC) rule?

net worth

marginal tax rate

income and cash-flow

tax consequences

NO.40 The owners of Underground Airways Ltd. want to take their privately owned corporation public through an initial public offering (IPO). They are speaking to a specialist from an investment dealer to determine whether it would be advisable to become listed on a stock exchange or the over-the-counter (OTC) market.
In comparing the two options, which of the following considerations is TRUE?

A stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market.

Underground would still be directly involved in the trading of their shares on either market.

Underground would be subject to less stringent listing requirements if they chose the stock exchange as compared to the OTC market.

If Underground chose to list on the OTC market, there would be no secondary market available for investors.

NO.41 Julia invested in ERF energy mutual fund three years ago. At that time, the price of the fund was $25.44 per unit. Over time, the unit price has dropped to $19.72, however Julia does not want to consider selling her investment until it returns to $25.44. What bias is she demonstrating?

Availability

Anchoring

Representativeness

Hindsight

NO.42 Zofia has held units of the ABC Monthly Income fund for many years and has reinvested all distributions by purchasing additional units. During this period, she received $2,500 in reinvested dividends. She originally purchased $10,000 of fund units, and after several years, the portfolio value rose to $15,000. What is the tax consequence if Zofia decides to sell her units?

The capital gain will be $5,000.

The NAVPS will be increased by the amount of the cumulative distributions.

The cumulative distributions will be taxed separately as an investment dividend when she sells her units.

The adjusted cost base would be $12,500.

NO.43 Karen works Monday to Wednesday for a member of the MFDA as a dealing representative and Thursday and Friday as a language instructor at a local college. Client orders received on Thursdays and Fridays are held until Karen returns to work the following week. What condition of dual employment is violated under these circumstances?

The dealer must maintain procedures to address any potential conflicts of interest

Karen’s alternate employment must not bring the MFDA, its members, or the mutual fund industry into disrepute

The dealer must maintain procedures to ensure continuous service to clients

The dealer must be aware of and approve of Karen’s other occupation

NO.44 You are collecting know your client (KYC) information for your new client, Yael. She has recently accepted an early retirement package from her employer and has $100,000 to invest. She is looking for an investment that will provide income to help pay her ongoing monthly expenses. Without this extra income, she would have trouble paying her bills. From your discussions, Yael understands that markets fluctuate and says she is comfortable with high risk. Which of the following would be a suitable investment?

global equity fund

money market fund

mortgage fund

Canadian equity index fund

NO.45 The Mutual Fund Dealers Association of Canada (MFDA) has strict rules concerning conflicts of interest.
Which of the following is TRUE?

Gifts and benefits may be provided to a client if your employer is aware of the benefits and has given approval.

Activities that do not relate specifically to your employer need not be reported.

Only actual conflicts must be reported to your employer. Potential conflicts need not be reported because they have not happened yet.

Borrowing money from a client will always be acceptable provided there is a written contract detailing the nature of the agreement.

NO.46 Which financial leverage ratio measures a company’s ability to repay its borrowings?

Operating profit margin ratio

Interest coverage ratio

Total debt ratio

Cash flow from operations to total debt ratio

NO.47 A client has $100,000 in savings, $5,000 in bank accounts, and $10,000 in loans. Calculate his net worth.

$115,000

$90,000

$105,000

$95,000

NO.48 How is a $10,000 withdrawal from a registered retirement savings plan (RRSP) taxed?

As regular income

As a deduction against other income

At a set rate of 30%

Based on the type of investment income type

NO.49 What type of fund offers the highest expected risk and the highest expected return in terms of the risk-return trade-off between different types of mutual funds?

Mortgage fund

Canadian Equity fund

Specialty fund

Real estate fund

NO.50 Why do speculators tend to avoid diversification?

Diversifying a portfolio may result in overall risk that is lower than that of its component securities

Diversifying a portfolio tends to increase the probability of very large gains and losses

Diversifying a portfolio tends to reduce the probability of very large gains and losses

Not diversifying a portfolio exposes the investor to the total risk of the securities

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