Free IFC Practice Test Questions 2026

The owners of Underground Airways Ltd. want to take their privately owned corporation public through an initial public offering (IPO). They are speaking to a specialist from an investment dealer to determine whether it would be advisable to become listed on a stock exchange or the over-thecounter (OTC) market. In comparing the two options, which of the following considerations is TRUE?

A. Underground would be subject to less stringent listing requirements if they chose the stock exchange as compared to the OTC market.

B. If Underground chose to list on the OTC market, there would be no secondary market available for investors.

C. Underground would still be directly involved in the trading of their shares on either market.

D. A stock exchange listing would provide Underground with greater market exposure and public confidence than listing on the OTC market.

On January 3, John invests $500 in the Blue Sky U.S. Equity Fund. On July 1 of the same year, he invests another $500 into the same mutual fund. Information about the net asset value per unit (NAVPU) at the time of each transaction is provided below. Given this information, what will be the value of John's investment on December 31 of this year (please ignore transaction costs and distributions)?

A. $1,198

B. $1,216

C. $1,256

D. $1,332

Yesterday, Mariana purchased mutual funds for the first time from Diablo, who is a Dealing Representative for Horizon Financial. When Mariana mentions to her friend Marcus that she just started to invest, Marcus confides that he experienced losses from mutual fund investing. Her initial feelings of excitement have now changed to worry and regret. She wished she had talked to her friend before investing and wonders if she can change her mind. Which statement regarding the right of withdrawal applies?

A. The right of withdrawal is based on the securities act legislation within the jurisdiction the purchase occurred

B. Before Mariana can cancel her order, she must wait two business days to pass before she can cancel her order

C. How the right of withdrawal can be applied is determined by the Mutual Fund Dealers Association of Canada's conduct rules

D. The Canadian Securities Administrators have instituted national instruments regarding Mariana's right to cancel her order

Raybert has a very short-term investment objective and has decided to purchase money market instruments. There are plenty of 90-day money market securities available for him to choose from. Although Raybert is aware that all the respective issuers have a similar need for his capital, no matter what he decides, he can only afford to purchase one. In terms of financial markets and their relationship to the principles of supply and demand, which characteristic of investment capital are the issuers being exposed to?

A. Mobility

B. Risk

C. Scarcity

D. Sensitivity

The following chart outlines data for various fund managers:

Which manager likely has the highest return for a given level of risk?

A. Manager A.

B. Manager C.

C. Manager D.

D. Manager B.

Fernanda, an advisor, is setting up her process for completing client suitability assessments. What must Fernanda do with respect to investment suitability?a

A. Reassess suitability as market conditions change

B. Recommend the lowest cost products

C. Review the Know Your Client information with clients at least annually

D. Assess suitability on solicited orders only

After completing the proficiency examinations, how long can an individual remain unregistered without having to rewrite these examinations?

A. 90 days

B. 3 years

C. 180 days

D. 1 year

What is the best risk assessment of a portfolio composed only of dividend-paying Canadian chartered bank stocks?

A. There is some risk since these bank stocks would have a positive correlation.

B. There is a high risk since these banks have volatile and unstable profits

C. There is no risk since these bank stocks are regarded as blue-chip companies

D. There is no risk since these bank stocks are dividend-paying stocks.

How does the life-cycle hypothesis assist an advisor while interacting with clients?

A. It forms part of the ongoing requirements of the Know Your Client rule

B. It suggests that as clients age they are in a better financial position to take on investment risk

C. It provides general assumptions regarding investment objectives based on a client's life stage

D. It identifies a client's current life stage and investment objectives by their age

Which factors would cause the management expense ratio charged by a mutual fund to be higher?
The fund invests in foreign equities
The fund is large in size
The fund is managed by the fund sponsor’s management team
The fund pays a trailer fee

A. 2 and 3

B. 1 and 2

C. 1 and 4

D. 3 and 4

When you buy a put option, which of the following is TRUE?

A. You have the right to sell a set number of shares at a set price.

B. You have the right to purchase a set number of shares at a set price.

C. You have the obligation to sell a set number of shares at a set price

D. You have the obligation to buy a set number of shares at a set price.

What type of benefit plan has a final benefit that is dependent on the investment returns within the plan?

A. Career average plan

B. Defined contribution plan

C. Final average plan

D. Flat benefit plan