Free IFC Practice Test Questions 2026

What type of GIC would be most appropriate for an investor who believes equity markets will be strong in the next five years?

A. Laddered

B. Index-linked

C. Cashable

D. Interest-rate-linked

Which form of investment income is taxed at an investor’s marginal tax rate?

A. Capital gains

B. Capital losses

C. Canadian dividend income

D. Foreign dividend income

Your client, a high-income earner in a high marginal tax bracket, is seeking to minimize the amount of tax he pays on investment income while continuing to invest in mutual funds. Which mutual fund would best meet his investment objective?

A. Fixed-income fund

B. Canadian equity fund

C. Money market fund

D. Foreign equity fund

Why do speculators tend to avoid diversification?

A. Diversifying a portfolio may result in overall risk that is lower than that of its component securities

B. Diversifying a portfolio tends to increase the probability of very large gains and losses

C. Diversifying a portfolio tends to reduce the probability of very large gains and losses

D. Not diversifying a portfolio exposes the investor to the total risk of the securities

What statement CORRECTLY describes a key difference between bonds and debentures?

A. Regular secured bonds offer a higher level of income than debentures.

B. Bonds are secured by the specific assets of a company whereas debentures are not secured by real assets or collateral.

C. Debentures have higher priority than bondholders for the company's assets in the event that the company goes bankrupt.

D. Debentures are considered high risk because they are not backed by the reputation or credit worthiness of the issuer.

Dale will be using his mutual fund portfolio to supplement his income from other sources. He is comfortable with variable payouts and fluctuating markets. What is the best solution for Dale?

A. Life withdrawal

B. Annuity plan

C. Fixed-period plan

D. Ratio withdrawal

Sharon short-sold 7,500 shares of LMP at $85. She later buys back the short position at $95. Sharon was charged a 1% commission on the proceeds for both the short sale and buyback transactions. What is Sharon's profit or loss?

A. $75,000 loss.

B. $74,250 profit.

C. $61,500 profit.

D. $88,500 loss.

What areas are addressed in the Client Relationship Model (CRM) regulation?

A. relationship disclosure, client communications, and client reporting

B. fraud prevention, relationship disclosure, and proper conduct

C. client communications, regulatory reporting, and fraud prevention

D. ethics, proper conduct, and client reporting

Over the course of a couple of weeks and several appointments, Harold was finally able to provide an investment solution for his new client, Felicia. It was a lump sum investment where they plan to see her money grow for the next 5 years. With regards to Know Your Client (KYC) requirements, what are Harold's responsibilities moving forward?

A. Monitor investment performance to determine if the investment solution is on track to satisfy Felicia's financial needs.

B. There are no other responsibilities for Harold to fulfill until the time horizon has been reached for this investment solution.

C. Within 36 months of the implementation of the investment, Harold must review the KYC to ensure it is current.

D. KYC does not need to be revisited or revised until there is a need to conduct additional trades for Felicia's account.

Axis Wealth Management Inc. is a mutual fund dealer and member of the Mutual Fund Dealers Association of Canada (MFDA). Indrek is a Branch Manager for the Guelph Branch and he is responsible for conducting suitability reviews in order to identify any unsuitable transactions or accounts. Which of the following accounts/transactions would be unsuitable?

A. Gilles has invested in various mutual funds using a leverage strategy recommended by his Dealing Representative. Gilles is 82, he is retired, he needs regular income, and his risk profile is "low".

B. Hundolf holds the Fortune Small Cap Equity Fund. Hundolf is fully employed, he is saving for his retirement in 18 years, his investment objective is "growth", and his risk profile is "medium-high".

C. Megara bought a principal protected note (PPN) with a 7-year maturity. Megara wants principal protection and has a long-term investment time horizon (10+ years).

D. Ulani is saving for the final payment she will owe on her pre-construction condominium. Ulani has invested in the Harbour Money Market Fund because she is seeking "safety".

Derek submits an order to sell 300 units of the Evergreen Canadian Mortgage Fund at 8:00 p.m. EST on Friday, January 6. His proceeds will be based on the net asset value per unit (NAVPU) for which day (assume no holidays)?

A. Friday, January 6

B. Monday, January 9

C. Tuesday, January 10

D. Wednesday, January 11

Pierre wants to discuss the merits of a specific mutual fund with his Dealing Representative, Simone. There are no trailer fees associated with this fund. Simone is familiar with the mutual fund that Pierre is referring to, which is not offered by her dealer. They schedule an appointment to further discuss his investment portfolio. Which behaviour from Simone is ethical?

A. Simone's ability to keep her knowledge current on competitors' investment offerings shows that she is putting her client's interest first.

B. Knowing Pierre does not like that her dealer's funds have trailer fees, she chooses not to discuss the relationship between trailer fees and MER while making comparisons.

C. When comparing her dealer's own mutual funds to the one Pierre discovered, Simone emphasizes the importance of similar net rates of return and minimizes the significance of management expense ratios (MERs).

D. While comparing Fund Facts of the different mutual funds, Simone points out that not only are the fund management expenses different but so are the investor profiles for each fund.