Free IFC Practice Test Questions 2026

Reginald is a Dealing Representative, who feels pressure from management at the beginning of every calendar year, to open new registered retirement savings plans (RRSPs) and generate RRSP contributions. It is the end of February, and Reginald is close to reaching his personal sales objectives. He just finished an appointment with a prospective new client, Orel. Orel wants to open a tax-free savings account (TFSA) to build emergency savings. However, Reginald recommended to Orel that he should first contribute to an RRSP, and then use the tax savings for a TFSA contribution. With regards to account suitability, what can be said about Reginald's advice?

A. Reginald is putting the client's interest first by informing Orel why he should change his investment strategy

B. Based on Orel's stated need, recommending an RRSP contribution is unsuitable

C. Recommending an investment solution that addresses two needs, is putting Reginald's client's interest first.

D. By convincing Orel to contribute to an RRSP, instead of a TFSA, Reginald has put his client's interest first

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?

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

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

C. She will be subject to annual maximum withdrawal limits

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

A self-directed investor bases stock purchase decisions on internet recommendations and stock tips, believing this provides the most accurate information. What is the investor's behavioural bias?

A. Endowment

B. Availability

C. Representativeness

D. Overconfidence

Which among the following BEST describes a company's retained earnings statement?

A. a company's financial position at a specific point in time

B. the amount of money contributed to the company by its shareholders or owners

C. the amount of profit that is reinvested in the company

D. the earnings and expenses of a business over a period of time

Which security is most likely to provide a capital gain if held to maturity?

A. A corporate bond bought at a discount

B. Cumulative preferred shares bought at par value

C. Common shares of a mature company

D. A government bond bought at a premium

F.

H.

For what reason do different entities have securities created and sold?

A. Government debt is reduced due to the capital that is received from investors when their securities are purchased.

B. When common shares are initially sold, the capital raised will increase the issuing corporation's retained earnings

C. Governments can address financial needs and support initiatives when securities are first sold

D. The issuance of securities is a method used by corporations to redistribute their wealth to investors to lower taxes.

Which of the following statements are CORRECT about labour sponsored investment funds (LSIFs)?

A. LSIFs are appropriate for investors with a short-term time horizon

B. All provinces offer some sort of additional tax credit for investors.

C. LSIFs are suitable for investors with a low risk tolerance.

D. Investors will forfeit their tax credits if they redeem their LSIF investment before 8 years have elapsed

Which statement best describes one of the main differences between short and long transactions?

A. In a long transaction, the investor must pay the broker the cost of repurchasing the shares

B. Short transactions are more common than long transactions

C. Short sales must result in a decline in the price of the stock that is sold short

D. Investors using long transactions anticipate a price increase in the security

Every February, Reginald, a Dealing Representative, feels pressured by his Manager to generate new registered retirement savings plans (RRSP) and contributions to assist the branch in meeting broader business targets. Reginald is nearing the end of February, and he has a meeting with a new client, Orel. Orel wants to open a tax-free savings account (TFSA) to develop emergency savings because he does not want to worry about his withdrawals being taxed. Reginald suggests that if Orel were to contribute to an RRSP first, then the resulting tax savings could be used to fund a new emergency account. In relation to account suitability, what can be said about Reginald’s advice?

A. Recommending an investment solution that addresses two needs is putting Reginald's client's interest first

B. Based on Orel's stated need, recommending an RRSP contribution is unsuitable

C. Reginald is putting the client's interest first by informing Orel why he should change his purpose for investing.

D. By convincing Orel to contribute an RRSP, instead of a TFSA, Reginald has put his client's interest first.

The XYZ Canadian Equity Income fund is classified as a large cap Canadian equity fund. Despite overall growth in the Canadian equity markets over the last several years, the fund has underperformed its peer group. What is one possible explanation for the underperformance?

A. The fund has employed an unusual level of leverage

B. The fund has an inappropriate asset category

C. The fund has a beta similar to the market

D. The fund has an above average Sharpe ratio

Details of a client's investment portfolio appear in the following table: Type of Funds Amounts Invested ($) Canadian equity growth fund 15,000 TSX equity index fund 25,000 Canadian resources fund 75,000 Canadian equity value fund 95,000 What is the primary risk of this investment portfolio?

A. Counterparty

B. Interest rate

C. Market

D. Foreign exchange

On January 2nd of this year Evan purchased 500 preferred shares of Ingram Ltd. The preferred shares have a par value of $25 per share and a quarterly dividend of $0.98 per share. They also give Evan the option to sell the shares back to Ingram at par value any time from now until September 1st two years from now. What type of preferred shares does Evan own?

A. retractable

B. convertible

C. participating

D. redeemable