CSI CSI-IFC Online Practice Questions and Exam Preparation

CSI CSI-IFC Online Questions & Answers

• Question 381:

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

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  Explanation

  A life income fund (LIF) is a type of registered retirement income fund (RRIF) that can be used to hold locked-in pension funds as well as other assets for an eventual payout as retirement income. A LIF cannot be withdrawn in a lump sum and has minimum and maximum withdrawal amounts each year. A LIF can only be funded by transferring money from a locked-in retirement account (LIRA) or another LIF.

  Therefore, D is the correct answer.

  References:

  Life Income Fund (LIF): Definition and How Withdrawals Work -Investopedia, Retraite Quebec - Characteristics of an LIF

• Question 382:

  What is a general observation of the Canadian mutual fund industry's evolution?

  A. Providers are advocating the development of more regulations.
  B. Providers are increasing the initial deposit requirements.
  C. Providers are expanding the number of fund types.
  D. Providers are raising the minimum locked-in periods.
  C. Providers are expanding the number of fund types.

• Question 383:

  What term describes the range of possible future outcomes on the price of a security?

  A. Beta
  B. Risk
  C. Fluctuation
  D. Return
  B. Risk

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  Explanation

  Risk refers to the potential volatility in returns or the range of possible future outcomes on the price of a security. This concept captures the uncertainty associated with a security's future value, a fundamental aspect of investment analysis.

  The feedback from the document states: "Risk is the potential volatility in returns or the range of possible future outcomes on the price of a security."

  References:

  Chapter 1 - The Role of the Mutual Fund Sales RepresentativeLearning Domain: An Introduction to the Mutual Funds Marketplace Exam B

• Question 384:

  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?

  A. Investment objective
  B. Shirley's risk profile.
  C. Expected time horizon.
  D. The tax consequences.
  B. Shirley's risk profile.

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  Explanation

  Shirley's risk profile is the primary consideration for Jonathan when making an investment recommendation. Risk profile is a measure of how much risk an investor is willing and able to take on in their portfolio. It is determined by factors such as age, income, net worth, investment objectives, time horizon, and personal preferences. It is essential for a dealing representative to assess the risk profile of their client before recommending any investment products or strategies, as they have a fiduciary duty to act in the best interest of their client and ensure that their recommendations are suitable for their client's needs and goals. The other variables are also important, but they are secondary to the risk profile.

  References:

  [Risk Profile], [Know Your Client (KYC)]

• Question 385:

  The demand for blue widgets increases sharply due to a newspaper report that using blue widgets improves recovery from influenza.

  What can be said about the law of supply?

  A. Price decreases and production increases
  B. Price increases and production decreases
  C. Price and production both decrease
  D. Price and production both increase
  D. Price and production both increase

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  Explanation

  The law of supply dictates that when demand exceeds supply, prices rise, prompting producers to increase production to meet demand and maximize profits. The feedback from the document states: "The law of supply states that when demand is greater than supply, the price increases, and producers increase production to meet demand and maximize profit."

  References:

  Chapter 3 - Economic PrinciplesLearning Domain: An Introduction to the Mutual Funds Marketplace

• Question 386:

  Which of the following statements is true when comparing fund of funds to traditional mutual funds?

  A. Fund of funds have higher fees than traditional mutual funds since there are two sets of management fees.
  B. Fund of funds have more asset class options available and lower fees than traditional mutual funds.
  C. Since fund of funds invest primarily outside Canada, they will have higher fees than traditional mutual funds.
  D. Fund of funds have more fee structure options available and lower fees than traditional mutual funds.
  A. Fund of funds have higher fees than traditional mutual funds since there are two sets of management fees.

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  Explanation

  A fund of funds is a mutual fund that invests in other mutual funds. This means that there are two levels of management fees: one for the fund of funds itself and one for the underlying funds. Therefore, fund of funds have higher fees than traditional mutual funds that invest directly in securities.

• Question 387:

  Which option is most appropriate for investors who prefer growth-oriented mutual fund trusts?

  A. Fund C
  B. Fund A
  C. Fund B
  D. Fund D
  B. Fund A

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  Explanation

  Growth-oriented mutual fund trusts focus on companies with above-average earnings growth, often leading to higher volatility and turnover compared to value investing. While the exact fund descriptions are not shown in this excerpt, based on CSC definitions, the fund most aligned with growth orientation is Fund A.

• Question 388:

  What is the maximum yearly CESG available to a family earning $150,000 annually?

  A. $500
  B. $600
  C. $550
  D. $100
  A. $500

• Question 389:

  Jehona is a Dealing Representative with Vista Wealth Investments Inc., a mutual fund dealer in Ontario and Nova Scotia. Jehona has reviewed her client Sokol's account and wants to adjust the holdings and re-balance the portfolio.

  Which of the following statements about Jehona's permitted activities is CORRECT?

  A. If Sokol has signed a Limited Authorization Form, Jehona can process the trades in the account without Sokol's pre-approval.
  B. If Jehona wants to execute trades for Sokol's account, Sokol must provide his specific authorization before the trades are entered.
  C. If Sokol has given Jehona discretionary trading authority, Jehona can process trades in the account without Sokol's pre-approval.
  D. If Jehona wants to execute the trades without Sokol's pre-approval, Sokol must first appoint Jehona as his Power of Attorney.
  B. If Jehona wants to execute trades for Sokol's account, Sokol must provide his specific authorization before the trades are entered.

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  Explanation

  The statement that is correct about Jehona's permitted activities is option B. According to Section 13.3 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), registered individuals must not engage in discretionary trading, meaning that they must not execute a transaction for a client's account without the specific authorization of the client before the transaction. Therefore, if Jehona wants to execute trades for Sokol's account, Sokol must provide his specific authorization before the trades are entered. The other statements are not correct about Jehona's permitted activities.

  Option A is false because a Limited Authorization Form does not allow Jehona to process trades in the account without Sokol's pre-approval; rather, it allows Jehona to accept instructions from a third party authorized by Sokol, such as a spouse or a lawyer.

  Option C is false because Sokol cannot give Jehona discretionary trading authority, as it is prohibited by NI 31-103 for mutual fund dealers and their representatives.

  Option D is false because appointing Jehona as his Power of Attorney does not allow Jehona to execute trades without Sokol's pre-approval; rather, it allows Jehona to act on behalf of Sokol in legal and financial matters, subject to certain conditions and limitations.

  References:

  [Registration Requirements, Exemptions and Ongoing Registrant Obligations], [Discretionary Trading | GetSmarterAboutMoney.ca], [Limited Authorization Form | IFIC], [Power of Attorney | GetSmarterAboutMoney.ca]

• Question 390:

  An unlicensed person was hired at a securities administrator, and they accepted their first case, which may result in suspending a registrant's license. The new hire immediately requests a subpoena of witnesses (and evidence) and requests guidance from the FATF.

  What error did the new hire likely commit?

  A. Requesting legally binding documentation
  B. Proceeding on a case without proper registration
  C. Engaging an unrelated inter-governmental department
  D. Investigating a licensing violation case
  B. Proceeding on a case without proper registration

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  Explanation

  In Canada, anyone involved in securities enforcement or adjudication must be properly licensed or registered.

  The unlicensed new hire erred by taking on a case (licensing violation) without being formally registered, violating regulatory requirements.

  Requesting subpoenas (A) and FATF involvement (C) may show poor judgment, but the fundamental error is acting without registration.