Free IFC Practice Test Questions 2026

What expense ratio is paid by mutual fund investors for the explicit costs of running the fund?

A. Operating expense ratio

B. Management expense ratio

C. Management fee ratio

D. Trading expense ratio

What value are withdrawals under a ratio withdrawal plan based upon?

A. Value at inception of plan

B. Average of start and year-end portfolio value

C. End of year portfolio value

D. Current portfolio value

Rebecca, an investor in a 40% marginal tax bracket, receives $1,200 in Canadian dividends eligible for the dividend tax credit. What is the dividend tax credit that applies to this income?

A. $248.73

B. $662.40

C. $1,200

D. $480

How can specialty mutual funds mitigate some of the risks associated with the product?

A. Reduce risk by holding securities with high market betas

B. Increase diversification by holding securities with low correlation

C. Increase returns through derivative market strategies

D. Reduce volatility by investing in fewer sectors

Which statement regarding Canada's income tax system is CORRECT?

A. Federal and provincial income tax brackets are both progressive and each respective jurisdiction determines the tax rates that will be used.

B. Once a person's taxable income reaches the next income tax bracket level, all income is subject to be taxed at the higher tax rate.

C. Tax credits will reduce an individual's taxable income and may lower that person's top marginal tax rate

D. After federal and provincial tax rates have been applied to a person's taxable income, tax deductions are then applied to reduce taxes

A portfolio that incurs a substantial loss due to a significant downturn in Canadian equities has been exposed to what type of risk?

A. Unique

B. Currency

C. Default

D. Systematic

An increase in which factor may cause interest rates to decrease?

A. Default risk

B. Business activity

C. Capital supply

D. Inflation rate

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

Which of the followings describes segregated funds?

A. Segregated funds have high returns, high management fees, and cannot be redeemed until the maturity date of the contract.

B. Segregated funds flow through capital losses to investors because the investors are the owners of the underlying fund

C. Segregated funds offer some protection of the capital invested but there is an added cost for the protection.

D. Segregated funds are subject to securities regulation because they are distributed by mutual fund dealing representatives

I.

Which statement best describes what a rational investor will do when comparing the risk and return of two investments?

A. He will select the one that maximizes risk and maximizes return

B. He will select the one with the lower risk because all investors are risk averse

C. He will select the one that minimizes risk and maximizes return

D. He will select the one with the higher expected risk because that is the only way to earn a higher return

Last year Peter’s earned income from employment was $50,000. Last year, after receiving a $2 per share in dividends from 500 shares in ABC Inc., a publicly-traded Canadian corporation, he sold his shares. The sale resulted in a capital gain of $15,000. Based on the tax rates mentioned above, what is Peter’s net federal tax liability for the year? (Round to 2 decimal places).

A. $9,953.30

B. $9,193.69

C. $9,113.53

D. $9,696.15

A client has $100,000 in savings, $5,000 in bank accounts, and $10,000 in loans. Calculate his net worth.

A. $115,000

B. $90,000

C. $105,000

D. $95,000