CIFC IFSE Institute Practice Questions

Question #1 (Topic: Demo Questions)

Reagan has accepted a role to be the Chief Revenue Officer of a charitable organization. She is currently registered as a Dealing Representative for Sunshine Financial Services.
Which of the following would apply to her?

A.

The dealer will closely monitor her sales activities to ensure any clients from the

charity are not getting a discount on potential fees.

B.

Holding both positions at the same time is a violation of securities industry rules and regulations .

C.

Reagan is not required to inform her dealer of this outside activity if none of her colleagues

from the charity become clients.

D.

The regulator will limit her from providing financial services to anyone associated with the charity.

Correct Answer: C

Explanation:

This answer is correct because according to FINRA Rule 3270, a registered representative must notify their firm in writing of any outside business activity (OBA) that involves compensation or the reasonable expectation of compensation from another person, or that may be viewed by customers or the public as part of the member’s business. However, if the OBA does not involve any of these factors, then the notification is not required. In this case, Reagan’s role as the Chief Revenue Officer of a charitable organization may not involve any compensation or any connection to her securities business, especially if none of her colleagues from the charity become clients. Therefore, she is not required to inform her dealer of this outside activity.

References = Outside Business Activities and Private Securities Transactions, Selling Away in Securities: Understanding FINRA Rule 3270

Question #2 (Topic: Demo Questions)

Taylor is chatting with other parents in the park when the conversation turns to registered education savings plans (RESPs). Taylor thinks that most of what they are saying is incorrect. Which of the following
statements about self-directed RESPs is TRUE?

A.

The government contributes an additional grant for low income families who qualify.

B.

Only one beneficiary may be named per RESP.

C.

Educational Assistance Payments (EAPs) may only be used for tuition for a post-secondary program.

D.

Educational Assistance Payments (EAPs) withdrawn from the plan are not taxable.

Correct Answer: A

Explanation:

A self-directed RESP is a type of RESP where the subscriber (the person who opens the plan) has the freedom to choose and manage the investments within the plan, such as stocks, bonds, mutual funds, etc. A self-directed RESP can have one or more beneficiaries (the children who will use the funds for their education) and can be individual or family plans. A self-directed RESP is eligible for the Canada Education Savings Grant (CESG), which is a 20% matching grant on the first $2,500 of annual contributions per beneficiary, up to a lifetime limit of $7,200. Additionally, low income families who qualify may receive an extra 10% or 20% on the first $500 of annual contributions per beneficiary, depending on their net family income. This is called the Additional CESG. Educational Assistance Payments (EAPs) are the payments made from the RESP to the beneficiary when they enroll in a qualifying post-secondary program. EAPs consist of the CESG, the Additional CESG, and any income or growth earned within the plan. EAPs may be used for any education-related expenses, such as tuition, books, transportation, accommodation, etc. EAPs are taxable in the hands of the beneficiary, who usually has a lower tax rate than the subscriber.

References : Canadian Investment Funds Course, Chapter 5: Registered Plans 1

Question #3 (Topic: Demo Questions)

Pierre buys a call option on a stock. What is the implication of this transaction?

A.

Pierre has the right to buy the stock if he exercises the option.

B.

Pierre is obligated to sell the stock if the option is exercised.

C.

Pierre has the right to sell the stock if he exercises the option.

D.

Pierre is obligated to buy the stock if the option is exercised.

Correct Answer: A

Explanation:

According to the What Is a Call Option and How to Use It With Example - Investopedia , a call option is a contract that gives the buyer the right, but not the obligation, to buy an underlying stock at a specified price (the strike price) within a specified time period (the expiration date). The seller of a call option is obligated to sell the stock if the buyer exercises the option. Pierre buys a call option on a stock, which means he has the right to buy the stock if he exercises the option. He can also choose not to exercise the option or sell it before expiration.

Question #4 (Topic: Demo Questions)

One of your clients, Fernando, is approaching 71 years of age and has a few questions regarding life
income funds (LIFs).
Which of the following statements about LIFs is TRUE?

A.

Fernando may make contributions to his LIF if he continues working

B.

Fernando is free to withdraw any amount from his LIF above the minimum amount.

C.

Fernando can transfer money from his registered retirement savings plan (RRSP) to a LIF.

D.

Fernando can transfer money from his locked-in retirement account (LIRA) to a LIF.

Correct Answer: D

Explanation not available for this question.

Question #5 (Topic: Demo Questions)

Wilma has always used the services of a tax preparation firm to file her taxes but is skeptical thatshe
has really benefitted. This year she plans to file her own taxes for the first time.
What would be useful for her to know?

A.

Wilma's marginal tax rate may be lowered when tax deductions are applied to her total income.

B.

Wilma's top marginal tax rate will be applied to every taxable dollar when her tax return is filed.

C.

Wilma's tax deductions permit her to reduce her tax payable dollar-for-dollar.

D.

Wilma's non-refundable tax credits may only reduce her taxable income dollar-for-dollar.

Next Question

Correct Answer: A

Explanation not available for this question.

IFSE Institute CIFC - Canadian Investment Funds Course Exam Certification Exam

Reagan has accepted a role to be the Chief Revenue Officer of a charitable organization. She is currently registered as a Dealing Representative for Sunshine Financial Services.Which of the following would apply to her?

The dealer will closely monitor her sales activities to ensure any clients from the

Holding both positions at the same time is a violation of securities industry rules and regulations .

Reagan is not required to inform her dealer of this outside activity if none of her colleagues

The regulator will limit her from providing financial services to anyone associated with the charity.

Correct Answer: C

Taylor is chatting with other parents in the park when the conversation turns to registered education savings plans (RESPs). Taylor thinks that most of what they are saying is incorrect. Which of the followingstatements about self-directed RESPs is TRUE?

The government contributes an additional grant for low income families who qualify.

Only one beneficiary may be named per RESP.

Educational Assistance Payments (EAPs) may only be used for tuition for a post-secondary program.

Educational Assistance Payments (EAPs) withdrawn from the plan are not taxable.

Correct Answer: A

Pierre buys a call option on a stock. What is the implication of this transaction?

Pierre has the right to buy the stock if he exercises the option.

Pierre is obligated to sell the stock if the option is exercised.

Pierre has the right to sell the stock if he exercises the option.

Pierre is obligated to buy the stock if the option is exercised.

Correct Answer: A

One of your clients, Fernando, is approaching 71 years of age and has a few questions regarding lifeincome funds (LIFs).Which of the following statements about LIFs is TRUE?

Fernando may make contributions to his LIF if he continues working

Fernando is free to withdraw any amount from his LIF above the minimum amount.

Fernando can transfer money from his registered retirement savings plan (RRSP) to a LIF.

Fernando can transfer money from his locked-in retirement account (LIRA) to a LIF.

Correct Answer: D

Wilma has always used the services of a tax preparation firm to file her taxes but is skeptical thatshehas really benefitted. This year she plans to file her own taxes for the first time.What would be useful for her to know?

Wilma's marginal tax rate may be lowered when tax deductions are applied to her total income.

Wilma's top marginal tax rate will be applied to every taxable dollar when her tax return is filed.

Wilma's tax deductions permit her to reduce her tax payable dollar-for-dollar.

Wilma's non-refundable tax credits may only reduce her taxable income dollar-for-dollar.

Correct Answer: A

Reagan has accepted a role to be the Chief Revenue Officer of a charitable organization. She is currently registered as a Dealing Representative for Sunshine Financial Services.
Which of the following would apply to her?

Taylor is chatting with other parents in the park when the conversation turns to registered education savings plans (RESPs). Taylor thinks that most of what they are saying is incorrect. Which of the following
statements about self-directed RESPs is TRUE?

One of your clients, Fernando, is approaching 71 years of age and has a few questions regarding life
income funds (LIFs).
Which of the following statements about LIFs is TRUE?

Wilma has always used the services of a tax preparation firm to file her taxes but is skeptical thatshe
has really benefitted. This year she plans to file her own taxes for the first time.
What would be useful for her to know?