Free IFC Practice Test Questions 2026

One of your clients, Rakesh, had a portfolio composed of 60% ABC Equity Fund and 40% ABC Bond Fund. Since equities were performing much better than fixed income, he had increased his holdings in ABC Equity Fund to 70% and had reduced his holding in ABC Bond Fund to 30% of his portfolio. After benefitting the growth in his ABC Equity Fund for over 2 years, Rakesh is uncomfortable with this heavy exposure to equity funds and decides to rebalance his portfolio back to 60% of ABC Equity Fund and 40% of ABC Bond Fund. He instructs you to switch 10% of the portfolio from the ABC Equity Fund to the ABC Bond Fund. Which of the following statements is CORRECT?

A. Rakesh will not be subjected to a switch fee if it is outlined in the prospectus

B. Rakesh will not be subjected to a switch fee if his equity fund is a no-load fund

C. Rakesh will not be subjected to a switch fee if his original units were purchased with a sales charge.

D. Rakesh will not be subjected to a switch fee if his equity fund is a low-load fund.

An investor seeks an equity investment that will mirror the performance of the energy sector in Canada. She desires a low-cost, flexible alternative that can quickly be bought or sold. Which product is most suited to her needs?

A. Energy-sector index mutual fund

B. Exchange-traded fund of energy sector stocks

C. Direct investment in energy sector stocks

D. Energy sector segregated fund

Manuel is a Dealing Representative for Commonwealth Financial Inc., a mutual fund dealer. His dealer represents many different mutual fund families available, including their own: CF Group of Funds. He is considering recommending a CF equity fund to one of his clients, Stefania. While describing details about the fund, he informs her that accounts are set-up in nominee name, and that their mutual funds are not transferable. In addition, the fund does pay trailer fees. What type of information has Manuel described about his potential investment recommendation?

A. The material conflict of interest

B. Features of a locked-in plan

C. Excessive trading

D. A Letter of Engagement

Ian is 25, employed, and has no dependents. He has no current financial or family obligations. He has asked for your recommendation for investing a $50,000 inheritance. What asset allocation would typically suit an investor with Ian’s characteristics?

A. 10% in a bond fund, 80% in equity funds, 10% in a money market fund

B. 10% in equity funds, 70% in a bond fund, 20% in a money market fund

C. 35% in equity, 25% in a money market fund, 60% in a bond fund

D. 50% in equity funds, 20% in a bond fund, and 30% in a money market fund

E.

L.

Dakota is a Dealing Representative with Harvest Wealth Inc., a mutual fund dealer. Dakota starts a marketing campaign to contact prospective new clients and increase sales with existing clients. Which of the following CORRECTLY describes activities that Dakota can engage in under her marketing campaign?

A. Dakota can make telemarketing calls to clients who are listed on the National Do Not Call List

B. Dakota can send promotional emails to clients who have opted into Harvest Wealth's Do Not Call List

C. Dakota can send promotional emails to clients who have opted in to receive commercial electronic messages (CEMs).

D. Dakota can make telemarketing calls to clients who have opted in to receive commercial electronic messages (CEMs).

Jeremy is reviewing the prospectus of a Canadian equity fund and notes the fund permits the use of derivatives. The stated objective of the derivative use is bet on the future movement of the market to increase the fund's returns. What should Jeremy be aware of regarding this fund?

A. Derivatives are used for speculation

B. Derivatives are used as a portfolio hedge

C. The fund limits derivatives up to 15% of the value of the portfolio

D. The fund limits derivatives up to 5% of the value of the portfolio

Ai Fen has recently become registered to sell mutual funds with Acadian Eastern Financial, a mutual fund dealer. Ai Fen determined that with her background of being a Chartered Financial Analyst, she can help people understand the nature of investing more easily than others in her field. Which registration category will need to be prominently noted on Ai Fen’s business card to comply with the “holding out rule”?

A. Dealing Representative

B. Registered Representative

C. Investment Representative

D. Chartered Financial Analyst

H.

Karen’s know your client (KYC) profile corresponds to someone who has a long time horizon, is comfortable with risk and volatility, and is primarily interested in growth. She watches the daily movements of the Toronto Stock Exchange (TSX) and wants a mutual fund that will closely match what she sees. What kind of mutual fund would be BEST for her?

A. Canadian small capitalization equity fund

B. Canadian equity index fund

C. Canadian dividend fund

D. Canadian bond fund

David had $10,000 in his investment account with Dynamic Investments, a mutual funds dealer. On June 28, David wants to buy 500 units in ABC Canadian Dividend Fund that has a Net Asset Value Per Unit (NAVPU) of $14.10. His friend Robert suggests that he may get a better price if he used the strategy of dollar-cost averaging. David then instructs his Dealing Representative to place a purchase order for 100 units on the first of every month starting July 1st for the next 5 months.
The orders are executed at the following NAVPUs.
July 01, $14.00
Aug. 01, $14.50
Sep. 01, $15.00
Oct. 01, $14.25
Nov. 01, $16.50
Did David get a better purchase price following the dollar-cost averaging strategy compared to making a lump-sum purchase of 500 shares on Jun 28, 20xx?

A. David got his 500 units at the same price as the lump sum price he would have paid.

B. David got his 500 units at a lower price than the lump sum price he would have paid

C. David realizes that Dollar cost averaging is the best strategy for getting lower prices.

D. David got his 500 units at a higher price than the lump sum price he would have paid

Which statement CORRECTLY describes index mutual funds and traditional exchangetraded funds (ETFs)?

A. Index funds use an active investment management style, whereas ETFs use a passive investment management style.

B. Both types of funds are closed-end investments that are required to hold the same securities as the index at all times

C. The market price of an ETF must match its net asset value (NAV), whereas there can be discrepancy in the pricing of index funds

D. Both types of funds attempt to replicate the return of a specific market index, but their returns may not perfectly match the index

Which of the following is typical for a normal yield curve?

A. short and long term rates are the same

B. long term rates are lower than short term rates

C. yields decline as term to maturity increases

D. short term rates are lower than long term rates

You are meeting a new client, Steven, and you are trying to determine his level of understanding of different investments. Which question would give you the most information regarding your client's familiarity with investing?

A. Do you want to minimize taxes from your investments?

B. What rate of return do you expect from investing

C. Do you understand the relationship between risk and return?

D. Do you have the resources to invest for the long-term?