IFC Exam Dumps - CSI Canadian Securities Course Questions and Answers

The standard of integrity requires dealing honestly, fairly, and with good faith in all personal and professional interactions with clients, including personal financial dealings.

Compliance (B) ensures adherence to laws, regulations, and firm policies.

Professionalism (C) relates to competence and ethical conduct.

Confidentiality (D) relates to safeguarding client information.

A T3 or T5 slip reporting a capital gain is issued when an investor sells their mutual fund units at a profit, not when the fund itself realizes gains. The feedback from the document states:

"In the normal course of portfolio management, shares are bought and sold either at a gain or at a loss for the fund. By the end of the year, many funds will have generated net capital gains on their portfolio transactions. The capital gains are distributed in the form of a capital gains dividend reported on a T5 or T3." However, for the investor, the correct answer is A, as clarified by standard tax rules: capital gains are realized by the investor upon selling units at a price higher than their average cost.

The Montreal Exchange (also referred to as Bourse de Montreal) is the only Canadian exchange specializing exclusively in financial and equity futures and options. The feedback from the document confirms:

"The Montreal Exchange (Bourse de Montreal) is the only exchange in Canada that deals exclusively with financial and equity futures and options."

 C is correct because bond funds receive fixed interest payments from most of their investments, as they invest mainly in bonds and other fixed-income securities that pay a regular coupon rate. Dividend funds receive variable dividend payments from most of their investments, as they invest mainly in stocks and other equity securities that pay dividends based on the company’s earnings and policies. The return of dividend funds does not rely only on interest rates (A), but also on other factors such as stock prices, earnings growth, dividend yield, and dividend payout ratio. The return of bond funds also depends on interest rates, as well as other factors such as credit quality, maturity, duration, and yield curve. When interest rates rise, the NAVPU of both bond funds and dividend funds decreases (B), not rises, as it lowers the present value of their future cash flows. Bond fund distributions do not receive more favorable tax treatment than that of dividend funds (D), but rather less favorable, as interest income is fully taxable at the investor’s marginal tax rate while eligible dividends receive a dividend tax credit that reduces their taxable amount.

PIPEDA (Personal Information Protection and Electronic Documents Act) requires firms to obtain informed consent when collecting, using, or disclosing personal information.

B (prohibit disclosure) is too absolute; exceptions exist (e.g., legal requirements).

C (verify client ID) is under AML rules, not PIPEDA.

D (must provide service if info refused) is incorrect; firms may deny services if info is not provided.

A Canadian equity index fund is a type of mutual fund that invests in stocks that track a Canadian equity market index, such as the S&P/TSX Composite Index or the S&P/TSX 60 Index. These indices measure the performance of the largest and most liquid companies listed on the Toronto Stock Exchange (TSX). A Canadian equity index fund aims to replicate the returns of the index it follows, before fees and expenses. Therefore, this type of fund would be best for Karen, who has a long time horizon, is comfortable with risk and volatility, and is primarily interested in growth. She also wants a mutual fund that will closely match what she sees on the TSX. References: CIBC Canadian Equity Index ETF, Top Canadian Index Funds of 2023 | The Motley Fool Canada

For a spousal RRSP, KYC information is required only for the account holder (the wife) and those with trading authority, not the contributing spouse (the husband), who has no financial interest in the account. The feedback from the document states:

"The investment experience and knowledge of all individuals who have trading authority over the account should be obtained, as well as KYC information for anyone with a financial interest in the account. For spousal RRSPs, the contributing spouse does not have a financial interest in the account, so KYC information is required for the non-contributing spouse only."

 B is correct because assessing historical differences in the rate of return per unit of risk of similar mutual funds helps a Dealing Representative to compare the performance and risk-adjusted returns of different mutual funds and select the most suitable one for a client’s risk tolerance and investment objectives. Comparing historical rates of return between different types of mutual funds (A) does not account for the risk involved in each type of fund. Referencing the fund code for each mutual fund that is being compared © does not provide any information about the fund’s characteristics, features, or suitability. The rights a client has if there is a desire to cancel the purchased mutual fund (D) are not relevant for determining a suitable mutual fund for a client.

Taline’s risk profile should be “low” because her risk capacity is low and she cannot afford large investment losses. Risk capacity is the degree of risk that an investor must take in order to achieve their financial goals, while risk tolerance is the degree of risk that an investor is willing to take. Risk capacity is more important than risk tolerance in determining an investor’s risk profile1. Taline has a low risk capacity because she lives on a low, fixed income and cannot afford to lose money. Her risk tolerance may be high, but that does not mean she should take more risk than she can handle. Faruq should not override Taline’s risk capacity or assess her risk profile based on the higher of her risk tolerance and risk capacity, as that would be unsuitable and unethical. References: Unit 3: Suitability

The correct answer is D. $1,000,000. The Investment Funds in Canada curriculum explains that the Canadian Investor Protection Fund (CIPF) provides protection to eligible customers if a CIRO (formerly IIROC or MFDA) dealer member becomes insolvent.

CIPF coverage applies to losses of property such as cash, securities, and other investment assets that were held by the dealer on behalf of clients. The CIFC text clearly states that coverage is provided up to $1 million per account category, such as general accounts and registered accounts.

It is important to note that CIPF does not protect against market losses, poor investment performance, or unsuitable advice. Its sole purpose is to restore client property when it is missing due to dealer insolvency.

The other amounts listed are incorrect and do not reflect current CIFC standards. The $1 million limit ensures investor confidence in the Canadian investment system and is a key component of investor protection.

Therefore, Option D is the correct and fully verified answer under the Investment Funds in Canada framework.