Free IFC Practice Test Questions 2026

In conjunction with investment objectives, what Know Your Client information is essential to allow an advisor to fulfill suitability assessment obligations?

A. Risk tolerance

B. Account type

C. Insider status

D. Referral arrangement

What information does Fund Facts provide to potential investors?

A. What the mutual fund is currently investing in.

B. How to calculate the taxes owed from investment income.

C. The portfolio management strategy that is used.

D. The remuneration paid to the Independent Review Committee.

What amount of Canadian taxes would an investor with a 33% marginal tax rate pay on a $5,000 dividend payment from a foreign corporation?

A. $0

B. $1,241

C. $1,650

D. $825

A sales representative has accepted an instruction from a relatively new client to liquidate all positions and wire the proceeds. This request appears rather unusual and suspicious, so she escalates this to her compliance department. To whom should the compliance department report these transactions?

A. Financial Transactions and Reports Analysis Centre of Canada.

B. The Privacy Commissioner.

C. Self-Regulatory Organization

D. Financial Action Task Force

What term applies to unemployment created by a new technology that eliminates the need for subway train drivers?

A. Structural

B. Frictional

C. Natural

D. Cyclical

Greg is a Dealing Representative. As a part of his business building activity, Greg prepares several messages to post on his website and Facebook page. Which statement CORRECTLY describes this situation?

A. Posting a sales communication to a website is prohibited by the Personal Information Protection and Electronic Documents Act (PIPEDA).

B. Posting messages to Facebook is prohibited by Canada's Anti-Spam Law (CASL).

C. Greg's messages must be approved by his dealer before he can publish or issue the communication.

D. Greg must not discuss the investment performance, rankings, or ratings of a fund in his communication.

Which of the following statements about standard deviation is CORRECT?

A. Indicates how much an investment's performance fluctuates around its average historical return.

B. A standard deviation greater than one indicates a higher level of volatility than the market.

C. Measures the systematic risk of an investment relative to a benchmark index.

D. Standard deviation is also referred to as beta.

What type of shares offer its shareholders the opportunity to receive additional dividends if the company’s profit exceeds a stated level?

A. Redeemable preferred shares

B. Cumulative preferred shares

C. Convertible preferred shares

D. Participating preferred shares

Greg, one of your clients, has been advised by a friend to invest in open-end mutual funds. He is not sure about the differences between open and closed-end funds. What would you tell Greg about open-end funds?

A. The number of units is not fixed, and varies with investor demand and redemption orders.

B. Investors holding open-end funds can buy and sell their mutual funds anytime the stock market is open.

C. Units are bought and sold amongst the unitholders.

D. Initial shares in the mutual fund are allotted through an initial public offering (IPO)

An investor with rudimentary investment knowledge is considering various recommendations. Assuming the investor’s risk-return profile suggests risk-seeking interests, which recommendation is most appropriate?

A. Establish a diversified GIC portfolio with laddered dates of maturity.

B. Invest in highly correlated assets to minimize portfolio risks.

C. Maximize monthly dividend distributions through common stocks.

D. Avoid combining fixed-income and equity securities.

A mutual fund sales representative receives a client’s purchase order for equity mutual funds and confirms that the order is appropriate based on the client’s recorded investment knowledge and risk tolerance. The client explains that she had inherited the funds from a family member. The client states her investment objective to be long term. The representative records this information and processes the order. What the representative doesn’t know is that the client has recently lost her job and is living on unemployment insurance. What step did the representative need to take in order to uphold her duty of care?

A. The representative should have applied the test of suitability to the unsolicited order

B. The representative should have verified that the client’s KYC information was updated before applying the suitability test

C. The representative should have probed the client’s understanding of equity funds

D. The representative should have applied due diligence in matching the order to the client’s KYC information

Nancy received a $160 taxable dividend from Can-Star Ltd., whose shares she holds in her non-registered account. Can-Star is a taxable Canadian corporation. What is the approximate amount of the dividend tax credit Nancy will receive on the shares?

A. $94

B. $24

C. $33

D. $61