Instant Access CISI.IFC.v2026-07-09.q224 Actual Practice Test Engine for Free (Page 14)

Question 61

In which province must registered dealing representatives notify their securities administrator of a personal bankruptcy?

A.Saskatchewan
B.Nova Scotia
C.Ontario
D.British Columbia

Question 62

Manuel is a Dealing Representative for Commonwealth Financial Inc., a mutual fund dealer. His dealer represents many different mutual fund families available, including their own: CF Group of Funds. He is considering recommending a CF equity fund to one of his clients, Stefania. While describing details about the fund, he informs her that accounts are set-up in nominee name, and that their mutual funds are not transferable. In addition, the fund does pay trailer fees.
What type of information has Manuel described about his potential investment recommendation?

A.The material conflict of interest
B.Features of a locked-in plan
C.Excessive trading
D.A Letter of Engagement

Correct Answer: A

A material conflict of interest is a situation where a dealing representative or a mutual fund dealer has an interest that may affect their ability to act in the best interest of their clients, or that may influence their judgment or behaviour. A material conflict of interest may arise from various sources, such as compensation arrangements, personal or business relationships, or ownership interests. In this case, Manuel has described some information that may indicate a material conflict of interest, such as:
*His dealer represents many different mutual fund families, including their own: CF Group of Funds. This may create a bias or incentive for Manuel to recommend the CF equity fund over other funds that may be more suitable for his client, Stefania.
*The accounts are set-up in nominee name, which means that the dealer is the registered owner of the mutual funds and holds them in trust for the client. This may affect the client's rights and benefits as the beneficial owner of the funds, such as voting rights, transferability, or access to information.
*The mutual funds are not transferable, which means that the client cannot move them to another dealer or fund family without selling them and incurring fees or taxes. This may limit the client's flexibility and choice, and create a lock-in effect for the dealer.
*The fund does pay trailer fees, which are ongoing commissions paid by the fund manager to the dealer for the services and advice provided to the client. This may create a conflict of interest for Manuel, as he may receive a portion of the trailer fees as part of his compensation. This may influence his recommendation of the fund, as he may benefit from the client's continued investment in the fund.
Manuel should disclose these potential material conflicts of interest to his client, Stefania, and explain how they may affect his recommendation of the CF equity fund. He should also ensure that his recommendation is based on the client's needs, objectives, risk tolerance, and time horizon, and that he provides the client with the necessary information and documents, such as the fund facts, to make an informed decision.
References = Canadian Investment Funds Course, Unit 7: The Regulatory Environment, Lesson 1: The Regulatory Framework, Section 7.1.3: Material Conflicts of Interest1; CIFC prepkit, Chapter 7: The Regulatory Environment, Question 7.1.3 2

Question 63

A fund manager is selling industrial sector stocks and using the proceeds to overweight the portfolio in financial services stocks to take advantage of her belief of changes in the business cycle. What equity investing philosophy describes this approach?

A.Growth investing
B.Momentum investing
C.Sector rotation
D.Growth at a reasonable price

Question 64

David had $10,000 in his investment account with Dynamic Investments, a mutual funds dealer. On June 28, David wants to buy 500 units in ABC Canadian Dividend Fund that has a Net Asset Value Per Unit (NAVPU) of $14.10. His friend Robert suggests that he may get a better price if he used the strategy of dollar-cost averaging. David then instructs his Dealing Representative to place a purchase order for 100 units on the first of every month starting July 1st for the next 5 months.
The orders are executed at the following NAVPUs.
July 01, $14.00
Aug. 01, $14.50
Sep. 01, $15.00
Oct. 01, $14.25
Nov. 01, $16.50
Did David get a better purchase price following the dollar-cost averaging strategy compared to making a lump-sum purchase of 500 shares on Jun 28, 20xx?

A.David got his 500 units at the same price as the lump sum price he would have paid.
B.David got his 500 units at a lower price than the lump sum price he would have paid.
C.David realizes that Dollar cost averaging is the best strategy for getting lower prices.
D.David got his 500 units at a higher price than the lump sum price he would have paid

Question 65

What portion of the withdrawal from a Registered Educational Savings Plan is tax-free?

A.Dividend income earned
B.Capital gains earned
C.Original capital contributed
D.Canadian Educational Savings Grant (CESG) amounts

Question 61

Question 62

Question 63

Question 64

Question 65

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