Free IFC Practice Test Questions 2026

What best describes why mortgage funds generally have less sensitivity to changes in interest rates than bond funds?

A. Many mortgage funds also hold T-bills and mortgage-backed securities, which are less volatile

B. Interest on mortgages is usually paid monthly, while interest on bonds is typically paid semi-annually

C. Mortgage funds are highly diversified, often holding over 10,000 individual mortgages

D. Most mortgages held in mortgage funds are either NHA-insured or privately insured

Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?

A. Clarence determines that the Absolute Alternative Fund is suitable for all of his clients. Clarence believes that all investors need alternative funds in order to be properly diversified.

B. Kiri recommends the Conservative Bond Fund to his client, Myrtle. The fund generates income and Myrtle's investment objective is "income" on her Know Your Client (KYC) form.

C. Li Ming recommends the Venturex Labour-Sponsored Fund to her client, Park. While Park has low tolerance and capacity for risk, Li Ming provides detailed disclosure which explains the fund's risks.

D. Roderik determines that the model portfolio he has developed will be suitable for all of his clients. Roderik has included investments with both income and growth to appeal to all investors.

Helen is an experienced investor and after all these years she believes that the market is completely efficient. What action would she undertake?

A. Invest in ETF that tracks the S&P/TSX Composite Index

B. Use market timing strategy trying to "beat the market"

C. Find a portfolio manager who will be managing her portfolio on an everyday basis

D. Monitor financial press in order to find securities that are under- or over-valued

Which financial instruments trade primarily in an auction market?

A. Equity initial public offerings

B. Mutual funds

C. ETFs

D. Bonds

Maalik opens an account for a new client, John. During the new account process, Maalik determines that he will need to confirm John’s identity. Which of the following statements about Maalik’s identification requirements is CORRECT?

A. If Maalik determines that there is anything suspicious about John’s transaction, he is required to report the matter to his dealer. The dealer must report the matter to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

B. If Maalik learns that John is the president of a state-owned company, Maalik is required to report John as a Politically Exposed Foreign Person (PEFP) to his dealer. If John is not a US person, the dealer must report the account to the Internal Revenue Service (IRS).

C. If John wants to make a large cash deposit of $10,000 or more, Maalik is required to collect personal information about John and report it to his dealer. The dealer must report the information to the Canada Revenue Agency (CRA).

D. If John attempts to make a suspicious deposit, Maalik is required to report the attempt to his dealer. The dealer must keep records of attempted suspicious transactions that are not reported to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

An increase in which factor is a result of a deflationary environment?

A. Corporate profits

B. Goods and services prices

C. Personal savings

D. Interest rates

An investor who wants to deplete their funds within the next five years is considering various withdrawal plans. Assuming the investor is less concerned about predictable annual cash flows, what withdrawal plan type is most appropriate for the investor?

A. Ratio.

B. Fixed-dollar

C. Life.

D. Fixed-period

The ZZZ Money Market Fund has a 7-day yield of 0.05%. What is the current yield for the fund? Round your answer to two decimal places.

A. 1.61%

B. 2.22%

C. 0.05%

D. 2.61%

Which financial target would usually indicate a medium-term goal for a 35-year-old?

A. Saving for an emergency fund

B. Saving for a child's university education

C. Saving for a down payment on a house

D. Saving for retirement

What is a statistical measure of price fluctuation that illustrates how a stock's price fluctuates around its average?

A. Spread.

B. Sharpe ratio

C. Correlation coefficient

D. Standard deviation

Which of the following best describes implied needs of your clients?

A. They are needs reflected by statements made by clients regarding problems and dissatisfactions.

B. They are statements made by you showing readiness to solve a client's problem

C. They are statements made by clients expressing the desire for lower commissions

D. They are statements of wants and needs made by clients

Sonya, a mutual fund manager for Drake Financial, has had a stellar year in managing their Canadian equity portfolio and has outperformed the benchmark by over 200 basis points. She is now concerned that within the last couple of months of this calendar year, the Canadian equity market is due for a 10 to 15% pullback. Which investment strategy would be most appropriate for her to implement for the last couple of months of the year to offset the market correction?

A. Buy put options on the iShares S&P/TSX 60 Index Fund

B. Buy call options on the iShares S&P/TSX 60 Index Fund

C. Increase her equity exposure to the consumer staples sector

D. Reduce her equity exposure to the energy sector