Dumps of CIFC Cover all the requirements of the Real Exam [Q48-Q68]

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Dumps of CIFC Cover all the requirements of the Real Exam

Correct Practice Tests of CIFC Dumps with Practice Exam

QUESTION 48
Which of the following statements describes a feature of the Home Buyers’ Plan (HBP)?

To qualify- as a first-time home buyer you or your spouse must never have previously owned a home

Once you are required to repay the amounts back to your RRSP. any missed or incomplete payments are subject to tax.

A qualifying home must be purchased by December 31 of the year of withdrawal.

If you have a spouse or common-law partner, each of you can withdraw up to JE50.000 from your registered retirement savings plans (RRSPs).

QUESTION 49
Marta is turning 71 years old this year. She will have to convert her registered retirement savings plan (RRSP) to a registered retirement income fund (RRIF). Which of the following statements is TRUE?

She will be able to continue contributing to her RRIF and be subject to the same annual limits as her RRSP.

When she converts her RRSP to a RRIF, she will incur a tax liability.

She will be subject to annual maximum withdrawal limits.

She does not have to withdraw the minimum amount this year.

QUESTION 50
Jasmine received an inheritance from her grandmother of $10,000. She wants to invest her money wisely. She has seen in the news that a particular energy company is doing very well and has good prospects. She has also seen how volatile its share price has been in the last year. She knows the risks of the resource sector and wants to invest but is not comfortable with so much volatility. Which of the following mutual fund benefits would address her concern?

convenience

low cost

diversification

liquidity

QUESTION 51
Your clients, Jessica and Ken, want to buy a house next year. You recommend a money market fund. How do you think a money market fund will help Jessica and Ken reach their goal?

Money market funds are safe investments because their net asset value per unit does not usually fluctuate.

Money market funds provide high returns without risking the capital invested.

Money market funds pay income weekly which can be automatically reinvested.

Money market funds provide investors a guaranteed fixed rate of return.

QUESTION 52
Your client, Cosmo, recently inherited $50,000 from his uncle. He wants to use this money towards his retirement savings. Cosmo is a 50-year old, self-employed carpenter and he earns on average $65,000 per year. He has a registered retirement savings plan (RRSP) with the bank worth $425,000 and a tax-free savings account (TFSA) worth $46,000. He started saving when he was 25 years old and has always made his own investment decisions. His money is mostly invested in balanced funds. He feels most comfortable with these types of mutual funds since they offer potential investment growth but without being too aggressive. Cosmo has no other assets.
What additional information do you need about Cosmo to fulfill your know your client obligation?

time horizon

income and net worth

risk tolerance

investment objectives

QUESTION 53
Which of the following statements is TRUE about inflation?

Inflation results in a redistribution of income from borrowers to lenders.

Generally inflation will benefit those who are living on investment income.

Purchasing power rises as inflation rises.

An increase in the inflation rate could mean investors have less money to invest.

QUESTION 54
Sachin owns units of a long-term bond fund. He has heard that the Bank of Canada is likely to make it more expensive to borrow money. He is worried that the value of his investment is going to drop. What sort of investing risk is Sachin experiencing?

inflation risk

interest rate risk

market risk

liquidity risk

QUESTION 55
Your employer has a contributory group RRSP under which he matches employee contributions, up to a maximum of 5% of salary.
Which of the following statements about a group registered retirement savings plan (RRSP) is CORRECT?

It is more costly and time consuming to administer than traditional pension plans.

If you leave your employer, your group RRSP stays with the employer.

You need to wait until you file your taxes to receive your contribution tax deduction.

The employer chooses the plan provider.

QUESTION 56
Your client Jerry’s asset mix is deviating from the original target asset mix because the stock market has had strong performance. Equities are now over-weighted in Jerry’s account. The original target asset mix is still valid since Jerry’s situation has not changed. He is invested in several bond and equity mutual funds. What should you do?

advise him to change his know your client (KYC) form to reflect more growth

advise him to do nothing since equities could outperform bonds in the next year

advise him to sell a portion of assets invested in bond funds and reinvest the proceeds into equity funds

advise him to sell a portion of assets invested in equity funds and reinvest the proceeds into bond funds

Explanation
According to the Canadian Investment Funds Course, asset mix rebalancing is the process of restoring the portfolio to its original or target asset allocation by selling or buying assets. Asset mix rebalancing is necessary to maintain the desired level of risk and return, as well as to align the portfolio with the investor’s objectives and circumstances. Asset mix rebalancing can be done periodically, such as annually or quarterly, or based on a threshold, such as when an asset class deviates from its target weight by a certain percentage.
In this case, Jerry’s asset mix is deviating from the original target asset mix because the stock market has had strong performance. Equities are now over-weighted in Jerry’s account. The original target asset mix is still valid since Jerry’s situation has not changed. He is invested in several bond and equity mutual funds.
Therefore, the best course of action is to advise him to sell a portion of assets invested in equity funds and reinvest the proceeds into bond funds. This will bring his portfolio back to its target asset mix and reduce his exposure to equity risk.
The other options are not advisable because:
Advising him to change his know your client (KYC) form to reflect more growth would imply that his risk tolerance and objectives have changed, which is not the case. Changing the KYC form would also require a new suitability assessment and documentation.
Advising him to do nothing since equities could outperform bonds in the next year would ignore the importance of asset mix rebalancing and expose him to more risk than he is comfortable with. Doing nothing would also mean that his portfolio is not aligned with his original plan and expectations.
Advising him to sell a portion of assets invested in bond funds and reinvest the proceeds into equity funds would further increase his equity weight and risk, which is contrary to his original target asset mix and risk tolerance.
Therefore, the correct answer is D. advise him to sell a portion of assets invested in equity funds and reinvest the proceeds into bond funds.
References: 1: Canadian Investment Funds Course – IFSE Institute 2 (Unit 10: Portfolio Management)

QUESTION 57
Which of the following statements about your mutual fund registration is CORRECT?

You can sell mutual funds anywhere in Canada as long as you are registered with one of the provincial or territorial securities commissions.

Your online application must be reviewed and approved by your mutual fund dealer before you can begin to sell mutual funds.

You must renew your registration through the online NRD system every two years.

You must inform the regulatory authorities of any material or significant changes to your personal circumstances.

QUESTION 58
As a measurement of risk, which of the following statements about beta is TRUE?

A larger beta for a stock means it will outperform the market at any point in the business cycle.

It is a relative measure that compares how an investment reacts to movements in a specific index.

It is a ratio that compares a company’s current rate of return to its average rate of return overtime.

It corresponds to a stock’s riskiness in relation to the frequency of dividend payments over a certain period of time.

QUESTION 59
Which investor’s needs would be BEST met with an income trust?

Tina wants a product that guarantees the return of at least 75% of her capital upon maturity of the contract or upon her death.

Leanne wants a product that employs alternative strategies such as leverage and short selling to amplify returns.

Gary wants to invest in a product which provides a consistent cash flow of interest, royalties, and lease payments passed along to unitholders.

Phil wants to invest in a product where the performance is linked to that of an underlying asset and the issuer is obligated to repay his principal at maturity.

QUESTION 60
Which of the following formulas correctly shows how taxable income is calculated?

gross income less tax credits

the sum of earned income and investment income

total income less tax deductions

the sum of income from all sources

QUESTION 61
Exchange traded funds (ETFs) that track an index and index mutual funds have many similarities. However, what is a major difference between these two products?

While ETFs are prone to tracking errors, index funds are perfectly aligned with their underlying index.

ETFs can be purchased continuously throughout the trading day while index funds can only be bought or sold at the end of the day.

The market price of ETFs always matches the underlying basket of securities while there can be a discrepancy in pricing index funds.

ETFs do not have management fees since they are exchange traded while index funds do incur such fees.

QUESTION 62
Your client, Rinaldo, wants to know more about the fees associated with his mutual funds. What can you tell him about a mutual fund’s management expense ratio (MER)?

Mutual funds are required to calculate the MER on a daily basis.

Trailer and brokerage fees are charged separately from the MER.

The MER reflects the percentage of each dollar of fund assets that is used to pay for management services.

Mutual fund performance is not impacted by the MER since rates of return are published net of fees.

QUESTION 63
Gregory is a conservative investor who wants to hold a portfolio of equity securities that would fall less than the overall market in a downturn.
Which of the following portfolios would you advise Gregory to invest in?

a portfolio with a beta equal to 1

a portfolio with a beta between 1 and 2

a portfolio with a beta greater than 2

a portfolio with a beta less than 1

QUESTION 64
Which of the following statements about total return for money market funds is TRUE?

Performance is displayed with both current yield and effective yield.

Effective yield will always be lower than current yield.

Current yield incorporates the compounding effect.

Current yield reflects the income earned on a money market fund for the most recent 14 day period.

QUESTION 65
What purpose does it serve for non-money market mutual funds to hold money market instruments?

Money market instruments primarily generate investment income that provides investors with preferential tax treatment.

If the portfolio manager has an immediate need for cash, money market instruments are relatively easy to liquidate.

They are purchased by non-money market funds to satisfy the regulatory requirement of fund diversification.

They ensure that the fair market value of a mutual fund will not drop below a minimal market value.

QUESTION 66
You ask a new client, Brad, “what are your financial obligations and what are your assets?” What information are you trying to gather in order to comply with the know your client (KYC) rule?

net worth

marginal tax rate

income and cash-flow

tax consequences

QUESTION 67
What do Guaranteed Income Supplement (GIS) and Allowance for the Survivor have in common?

ability to defer benefits

benefits start at the age of 65

eligibility depends on income level

benefit amounts depend on individual contribution

QUESTION 68
Which of the following statements best describes dollar-cost averaging?

It is a type of systematic withdrawal program.

It is buying a set dollar amount of a mutual fund on a regular basis