CSI CSI-IFC Online Practice Questions and Exam Preparation

CSI CSI-IFC Online Questions & Answers

• Question 391:

  What does relative performance seek to compare between a fund and the other funds in its category?

  A. Annual returns
  B. Sharpe ratio
  C. Standard deviation
  D. Beta coefficient
  A. Annual returns

• Question 392:

  An employee may begin offering mutual fund advice following the completion of which requirement?

  A. Registration as a representative.
  B. Industry-related proficiency courses.
  C. Six-month close supervision.
  D. 90-day training program.
  A. Registration as a representative.

• Question 393:

  Recently interest rates have gone up. Your customer, Mr. Corelli, has asked you how this will affect the value of his mortgage fund.

  What is the best response to give to Mr.

  Corelli?

  A. The mortgage fund will not be affected because the rise in interest rates will affect only new mortgages
  B. The value of the mortgage fund will go down because new mortgages will pay higher interest than those in the fund
  C. The mortgage fund will not be affected because mortgages do not react to changes in interest rates the way bonds do
  D. The value of the mortgage fund should go up because mortgages will now be earning higher interest
  B. The value of the mortgage fund will go down because new mortgages will pay higher interest than those in the fund

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  Explanation

  Fixed-income securities, including mortgage funds, decrease in value when interest rates rise because existing mortgages with lower rates become less attractive compared to new, higher-yielding mortgages.

  The feedback from the document states: "Fixed-income securities move in the opposite direction to market interest rates... Let's assume you are the fund manager for a mortgage mutual fund, which has mortgages paying 5%. If mortgage rates suddenly increase to 6%, only the interest rates on newly negotiated mortgages would increase... The investor would not pay you par for a 5% rate. If you wished to sell the mortgages, then you would have to lower your price until the price paid-given the 5% fixed payments to be made-results in a return to the buyer of 6%, the 'going rate' on mortgages. In other words, the market value of your par value mortgages must fall."

  References:

  Chapter 11 - Conservative Mutual Fund ProductsLearning Domain: Analysis of Mutual Funds

• Question 394:

  A portfolio manager of a bond fund who believes interest rates will fall should do what?

  A. Switch from bonds with low coupon rates to bonds with high coupon rates.
  B. Switch from long-term maturity bonds to short-term maturity bonds.
  C. Switch from bonds with longer duration to bonds with shorter duration.
  D. Switch from bonds with shorter duration to bonds with longer duration.
  D. Switch from bonds with shorter duration to bonds with longer duration.

• Question 395:

  In which of the following situations would the client mobility exemption apply?

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

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  Explanation

  The client mobility exemption is a provision in the National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations that allows a registered individual to continue dealing with a client who moves to another jurisdiction without having to register in that jurisdiction, subject to certain conditions. One of the conditions is that the individual must not have more than five clients in each of the other jurisdictions where they are not registered.

  Therefore, the client mobility exemption would apply to Lori' s situation, as she has five or fewer clients in Alberta, where she is not registered. The client mobility exemption would not apply to the other situations, as they do not meet the conditions for the exemption. For example, Olaf's mutual fund dealer is not registered in New Brunswick, which is a requirement for the exemption. Sigrid's brother-in-law is not an existing client who moved to another jurisdiction, but a new client who resides in a different jurisdiction. Karl has more than five clients in British Columbia, where he is not registered, which exceeds the limit for the exemption.

  Canadian Investment Funds Course, Chapter 1: The Canadian Financial Services Industry1

• Question 396:

  What type of fee does a mutual fund sponsor often reduce the longer an investor holds a back-end load fund?

  A. Sales fee
  B. Acquisition fee
  C. Redemption fee
  D. Trailer fee
  C. Redemption fee

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  Explanation

  Back-end load funds often have a decreasing redemption fee (deferred sales charge) schedule, which reduces the longer the investor holds the fund. The feedback from the document states: "Fund sponsors use a decreasing redemption fee (deferred sales charges) schedule to recover their costs from investors who opt out of the fund early. In most cases, redemption fees on a back-end load fund decrease the longer the investor holds the fund."

  References:

  Chapter 16 - Mutual Fund Fees and ServicesLearning Domain: Evaluating and Selecting Mutual Funds

• Question 397:

  Hamid, the portfolio manager of the Trabant Canadian Equity Fund is deciding on some new investments. He has identified a retirement residence company as well as a discount clothing retailer that both seem to have good prospects and appear undervalued.

  What investment approach is Hamid using?

  A. top-down
  B. bottom-up
  C. growth at a reasonable price
  D. technical investing
  B. bottom-up

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  Explanation

  Hamid is using a bottom-up investment approach, which focuses on the analysis of individual stocks rather than the overall market or industry trends. Hamid is looking for companies that have strong fundamentals and are undervalued by the market, regardless of their sector or macroeconomic factors.

  References:

  Investment Strategies to Learn Before Trading

• Question 398:

  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
  C. Ontario

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  Explanation

  The correct answer is C. Ontario. The Investment Funds in Canada course specifies that the Ontario Securities Commission (OSC) requires registered individuals to notify the regulator of significant personal financial events, including personal bankruptcy.

  This requirement exists because personal financial distress may raise concerns about integrity, solvency, and the ability to manage client assets responsibly. While all provinces require high standards of conduct, Ontario explicitly mandates disclosure of bankruptcy to the securities administrator. The CIFC text highlights that registrants must comply with jurisdiction-specific reporting obligations, making awareness of provincial differences critical. Therefore, Option C is the correct and CIFC-verified answer.

• Question 399:

  Thomas, a resident of Ontario, is a full-time university student. He does food delivery to supplement his income. During the school year, he works on weekends and works full-time during his summer break.

  Thomas' pensionable earnings were $16,000 for the year.

  How much must Thomas contribute to CPP when CPP contribution rate is 5.95%?

  A. $0
  B. $743.75
  C. $912.00
  D. $1,425.00
  B. $743.75

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  Explanation

  Thomas must contribute to CPP based on his pensionable earnings, which are his income from employment or self-employment that are subject to CPP. However, he can deduct a basic exemption amount from his pensionable earnings, which is $3,500 for the year. Therefore, his contributory earnings are:

  16,000#3,500=12,500

  The CPP contribution rate is 5.95% for employees and self-employed workers. Therefore, Thomas must contribute:

  12,500x5.95%=743.75

  Canadian Investment Funds Course (CIFC) Study Guide, Chapter 6: Registered Plans, Section 6.3:

  Canada Pension Plan (CPP), page 6-101

  Canada Pension Plan - How much could you receive - Canada.ca2

• Question 400:

  Lucas is 60 years old and continues to work. He presently is a plan holder of a registered retirement savings plan (RRSP). He is considering changing his RRSP to a registered retirement income fund (RRIF).

  Which of the following statements is CORRECT?

  A. There is no minimum age to be an annuitant to a RRIF.
  B. Once he changes his RRSP to a RRIF, his unused total RRSP contribution room is lost.
  C. Minimal withdrawals are required to start in the current calendar year his RRIF was established.
  D. Investments that qualify as an eligible investment for a RRIF are different than for an RRSP.
  B. Once he changes his RRSP to a RRIF, his unused total RRSP contribution room is lost.

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  Explanation

  A registered retirement income fund (RRIF) is a type of registered plan that provides a stream of income in retirement. A RRIF can be created by converting an RRSP, but once the conversion is done, the plan holder can no longer make contributions to the RRSP or the RRIF. Therefore, any unused RRSP contribution room is lost after the conversion. The other statements are incorrect because:

  A. There is a minimum age to be an annuitant to a RRIF, which is 71 years old. However, a plan holder can convert an RRSP to a RRIF at any age before 71.

  C. Minimum withdrawals are required to start in the year following the year the RRIF was established, not in the current calendar year.

  D. Investments that qualify as an eligible investment for a RRIF are the same as for an RRSP, such as mutual funds, stocks, bonds, GICs, etc.

  References:

  Canadian Investment Funds Course (CIFC) Study Guide, Chapter 6: Registered Plans, Section 6.2: Registered Retirement Income Fund (RRIF), page 6-81 Registered Retirement Income Fund (RRIF) - Canada.ca2