Free IFC Practice Test Questions 2026

The demand for blue widgets increases sharply due to a newspaper report that using blue widgets improves recovery from influenza. What can be said about the law of supply?

A. Price decreases and production increases

B. Price increases and production decreases

C. Price and production both decrease

D. Price and production both increase

Michael is trying to determine how much his investments will need to grow to provide for his retirement income. He would like to ensure that his projections factor in the need to maintain purchasing power. What form of return should Michael use in his analysis?

A. Nominal rate of return

B. Real rate of return

C. Annualized rate of return

D. Holding period return

Sylvia decided to use the savings from her bank account to purchase a 5-year bond. The face value of the bond is $10,000, the market price is $9,230 and the coupon rate is 7%. What is the current yield on the bond? Round to 2 decimal places

A. 7.00%

B. 7.25%

C. 7.58%

D. 7.75%

An investor purchases units of an equity fund for $17.60. In which of the following circumstances would an investor potentially owe taxes on capital gains?

A. The fund is sold today for $18.80 per unit and the proceeds are reinvested

B. The fund is currently valued at $18.80 per unit

C. A dividend distribution is reinvested into additional units of the same fund

D. The fund is currently valued at $16.45 per unit

Kerry's total income this past year was $100,000 and she claimed a tax deduction of $2,000. When the tax return is filed, what would be the federal tax payable when applying the following federal tax rates? (Round to the closest whole dollar for the final answer.)

A. $17,472

B. $18,754

C. $24,000

D. $25,480

E.

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

A. Performance is displayed with both current yield and effective yield

B. Effective yield will always be lower than current yield

C. Current yield incorporates the compounding effect

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

What bias would influence an investor’s decision to continue to hold an unprofitable investment despite little likelihood of an improvement in the investment’s value?

A. Representativeness

B. Loss aversion

C. Status quo

D. Cognitive dissonance

F.

Nelson is a Dealing Representative with True Wealth Advisors Inc., a mutual fund dealer. Nelson follows proper procedures related to his firm’s Relationship Disclosure Information (RDI). Which of the following CORRECTLY describes how Nelson is permitted to evidence that he satisfied his RDI obligation?

A. Nelson may retain a copy of the RDI in the client file with detailed notes to confirm that he provided and explained the RDI to the client.

B. Nelson may deliver the RDI to clients who request it and keep detailed notes of the clients who were provided with the RDI.

C. Nelson can formalize his relationship under the RDI using a Letter of Engagement that specifies duties, responsibilities, and level of service.

D. Nelson can record detailed notes which confirm that he provided and explained the Fund Facts to the client within 2 days of the RDI.

Janine will celebrate her 71st birthday this year. She currently has a lot of money in a personal registered retirement savings plan (RRSP) and knows there are rules about what she can do with those funds. Which of the following is TRUE?

A. She can convert her RRSP to a locked-in retirement income fund (LRIF).

B. She can convert her RRSP to a registered retirement income fund (RRIF) this year or by December 31st of next year.

C. She can take the entire amount in cash, with no tax consequences because her RRSP funds were tax-sheltered

D. She can purchase a registered term or life annuity

What is the first step before becoming eligible for registration as a mutual fund dealing representative?

A. File a registration application through the dealer

B. Complete the 90-day training program

C. Pass the proficiency examination

D. Pay the registration fee with the applicable securities administrator.

Maxine is a portfolio manager who 15 years ago, purchased 100 shares of Never2Tacky, a social media corporation for Aspirations Global Technology Fund. She purchased the stock when it was trading at $10. Last year, the peak market price was $120. Presently, it is trading at $99. News agencies are now reporting that additional regulations regarding social media companies are about to be agreed upon by G7 countries. Maxine is concerned the market value of Never2Tacky is going to drop. She buys a put option with an exercise price of $95 with an expiry of 9 months. What type of strategy is Maxine using?

A. Speculating

B. Modern portfolio theory

C. Passively managing

D. Hedging

What is often a requirement of maintaining licensing as a mutual fund sales representative?

A. Satisfying continuing education requirements

B. Choosing a product specialization

C. Keeping assets under management above minimum thresholds

D. Passing annual proficiency exams