IFC Exam Preparation Material | Investment Funds in Canada (IFC) Exam

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Question#1

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

Explanation:
Mutual fund orders placed after the market closes are processed using the next business day's net asset value per unit (NAVPU). Since Derek submitted his sell order at 8:00 p.m. EST on Friday, January 6 (after the close of the markets), his proceeds will be based on the NAVPU for Monday, January 9, the next business day.
Reference: This information is consistent with the standard practice for mutual fund transactions as outlined in the Canadian Investment Funds Course (CIFC). The CIFC materials provided by IFSE Institute (https://www.ifse.ca/courselist/canadian-investment-funds-course-cifc/ and https://www.ifse.ca/resources/) cover the procedures and timings related to mutual fund transactions.

Question#2

What does suitability mean?

A. Recommendations are appropriate for the client’s unique situation and investment objectives

B. The investor’s major concerns are addressed

C. Understanding the personal and financial knowledge of the client

D. Recommendations are not based on the personal and financial knowledge of the client

Explanation:
Suitability ensures that recommendations align with the client’s unique situation and investment objectives, based on their personal and financial circumstances.
The feedback from the document states:
"Suitability means ensuring that all recommendations are appropriate for the client’s unique situation and investment objectives. It also means that recommendations are based on a personal and financial knowledge of the client and knowledge of the investment products being recommended."
Reference: Chapter 1 C The Role of the Mutual Fund Sales Representative Learning Domain: An Introduction to the Mutual Funds Marketplace

Question#3

In what circumstance would an investor receive a T3 or T5 reporting a capital gain from a mutual fund investment?

A. When the investor sells her fund units at a price higher than their average cost

B. When the fund sells investments at a price higher than the average cost of the investment

C. When the value of the investor’s fund units has risen

D. When the value of the fund’s investments has risen

Explanation:
A T3 or T5 slip reporting a capital gain is issued when an investor sells their mutual fund units at a profit, not when the fund itself realizes gains.
The feedback from the document states:
"In the normal course of portfolio management, shares are bought and sold either at a gain or at a loss for the fund. By the end of the year, many funds will have generated net capital gains on their portfolio transactions. The capital gains are distributed in the form of a capital gains dividend reported on a T5 or T3." However, for the investor, the correct answer is A, as clarified by standard tax rules: capital gains are realized by the investor upon selling units at a price higher than their average cost.
Reference: Chapter 16 C Mutual Fund Fees and Services Learning Domain: Evaluating and Selecting Mutual Funds

Question#4

Reginald is a Dealing Representative, who feels pressure from management at the beginning of every calendar year, to open new registered retirement savings plans (RRSPs) and generate RRSP contributions. It is the end of February, and Reginald is close to reaching his personal sales objectives. He just finished an appointment with a prospective new client, Orel. Orel wants to open a tax-free savings account (TFSA) to build emergency savings. However, Reginald recommended to Orel that he should first contribute to an RRSP, and then use the tax savings for a TFSA contribution.
With regards to account suitability, what can be said about Reginald's advice?

A. Reginald is putting the client's interest first by informing Orel why he should change his investment strategy.

B. Based on Orel's stated need, recommending an RRSP contribution is unsuitable.

C. Recommending an investment solution that addresses two needs, is putting Reginald's client's interest first.

D. By convincing Orel to contribute to an RRSP, instead of a TFSA, Reginald has put his client's interest first.

Explanation:
Orel’s goal is to build emergency savings, which means he needs a flexible and accessible account that does not penalize withdrawals. A TFSA is more suitable for this purpose, as it allows tax-free withdrawals at any time and does not affect other income-tested benefits. An RRSP, on the other hand, is designed for long-term retirement savings, and withdrawals are subject to income tax and withholding tax. Moreover, RRSP withdrawals reduce the contribution room permanently, and may affect eligibility for government benefits such as the Canada Child Benefit or the Guaranteed Income Supplement.
Reference = Canadian Investment Funds Course (CIFC) - Module 3: Registered Plans - Section 3.1:
Registered Retirement Savings Plan (RRSP)1 and Section 3.2: Tax-Free Savings Account (TFSA)2
1: https://www.ifse.ca/wp-content/uploads/2021/08/CIFC-Module-3.pdf 2: https://www.ifse.ca/wp-content/uploads/2021/08/CIFC-Module-3.pdf

Question#5

When comparing the current yield and yield-to-maturity of a bond, which statement applies?

A. Yield-to-maturity accounts for the reinvestment of coupon payments.

B. Yield-to-maturity is based on the current market value of the bond, not the price paid.

C. Capital gains or capital losses are reflected in the current yield calculation.

D. Current yield includes in the calculation the time to maturity.

Explanation:
This statement is correct because yield-to-maturity (YTM) is the annualized rate of return of a bond that assumes that all coupon payments are reinvested at the same rate until the bond matures. YTM takes into account the bond’s current market price, par value, coupon rate, and time to maturity, and it calculates the compound interest earned on the reinvested coupons.
Therefore, YTM reflects the total return of the bond, including both the interest income and the capital gain or loss.
Reference = Current Yield vs. Yield to Maturity - Investopedia, Yield to Maturity (YTM) - Investopedia, Bond Current Yield Calculator

Exam Code: IFC
Q & A: 486 Q&As Updated: Nov 02,2026

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Use your results and the provided explanations to find weaker areas and focus your study more effectively.

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Exam Code: IFC
Q & A: 486 Q&As
Updated: Nov 02,2026

Access Complete IFC Preparation Material