Updated Mar-2024 Exam CIFC Dumps – Pass Your Certification Exam [Q20-Q37]

NEW QUESTION 20
Quintin has been a Dealing Representative for Global Maximum Financial for 5 years. Today, he opened an account for his new client, Reginald. In addition to opening a new account, Reginald agreed to accept Quintin’s investment recommendation and placed a purchase order to buy units of the Global Maximum Value Equity fund.
Quintin informed his Branch Manager Lupita about this new account on the same day the purchase order was received. Lupita told Quintin that she would complete her review of the New Client Application Form (NCAF) by no later than tomorrow.
Which statement regarding this new account opening is CORRECT?

Quintin cannot accept purchase orders from a client until Lupita completes her review of the NCAF.

Lupita has two business days from the date of opening the new account to approve the NCAF completed by Quintin.

Quintin and Lupita are both following proper procedure regarding new account openings and purchase orders.

Unless Quintin is presently under probation, he does not need Lupita’s approval regarding the NCAF.

NEW QUESTION 21
Which statement CORRECTLY describes index mutual funds and traditional exchange-traded funds (ETFs)?

Index funds use an active investment management style, whereas ETFs use a passive investment management style.

Both types of funds are closed-end investments that are required to hold the same securities as the index at all times.

The market price of an ETF must match its net asset value (NAV), whereas there can be discrepancy in the pricing of index funds.

Both types of funds attempt to replicate the return of a specific market index, but their returns may not perfectly match the index.

NEW QUESTION 22
Xerxes, 45 years old, is a successful architect, having an annual income of $185,000. He has around $10,000 in his non-registered account, which he is looking to invest in a tax-efficient manner.
From the following options, which would be the most tax-efficient?

bond fund

Canadian equity index fund

asset allocation fund

target date fund

NEW QUESTION 23
Catarina is a Dealing Representative for Ethical Financial which represents 20 different mutual fund families.
Darlene is a fund manager from one of those mutual fund families and wants to send a gift card to Catarina as a symbol of appreciation. Ethical Financial’s policies and procedures manual (PPM) require that Catarina decline the gift.
What method of addressing conflict of interest is being used by Ethical Financial?

Potential

Disclosure

Avoidance

Control

NEW QUESTION 24
Which of the following statements describes a feature of the Home Buyers’ Plan (HBP)?

To qualify- as a first-time home buyer you or your spouse must never have previously owned a home

Once you are required to repay the amounts back to your RRSP. any missed or incomplete payments are subject to tax.

A qualifying home must be purchased by December 31 of the year of withdrawal.

If you have a spouse or common-law partner, each of you can withdraw up to JE50.000 from your registered retirement savings plans (RRSPs).

NEW QUESTION 25
Jasmine purchases a 1-year, $10,000 face value strip bond for $9,600. At maturity, when Jasmine receives
$10,000, which of the following statements is CORRECT?

Jasmine realizes a capital dividend of S400.

Jasmine realizes a taxable dividend of $400.

Jasmine realizes a taxable capital gain of $400.

Jasmine realizes interest income of $400.

NEW QUESTION 26
Patrick is a portfolio manager for the HyperTally Growth Fund. It has generated an annualized rate of return of
10% this past year. However, with the anticipation of very high inflation to soon occur, there is also an expectation of higher interest rates. Patrick is concerned about the future returns of existing stocks within the fund. What may Patrick do to protect against the market value of the fund dropping?

Agree to buy forward contracts where he is in the “long’ position.

Buy call options for the existing stocks stored within the fund.

Avoid the use of derivatives because they are speculative in nature.

Purchase put options for the fund’s existing assets.

NEW QUESTION 27
Leira has a marginal tax rate of 45% and may deduct $5,000 in registered retirement savings plan (RRSP) contributions on her income tax return. If she decides to use her available deduction and assuming this does not reduce her taxable income to a lower tax bracket, by how much will it reduce her tax payable?

$5,000

$4,500

$2,250

$0

NEW QUESTION 28
Dakota is a Dealing Representative with Harvest Wealth Inc., a mutual fund dealer. Dakota starts a marketing campaign to contact prospective new clients and increase sales with existing clients. Which of the following CORRECTLY describes activities that Dakota can engage in under her marketing campaign?

Dakota can make telemarketing calls to clients who are listed on the National Do Not Call List

Dakota can send promotional emails to clients who have opted into Harvest Wealth’s Do Not Call List

Dakota can send promotional emails to clients who have opted in to receive commercial electronic messages (CEMs).

Dakota can make telemarketing calls to clients who have opted in to receive commercial electronic messages (CEMs).

NEW QUESTION 29
Which of the following statements is true when comparing fund of funds to traditional mutual funds?

Fund of funds have higher fees than traditional mutual funds since there are two sets of management fees.

Fund of funds have more asset class options available and lower fees than traditional mutual funds.

Since fund of funds invest primarily outside Canada, they will have higher fees than traditional mutual funds.

Fund of funds have more fee structure options available and lower fees than traditional mutual funds.

NEW QUESTION 30
Your client has very limited investment knowledge and is confused about what is meant by “marginal tax rate”. What do you tell him?

It is the tax rate applied to the next dollar earned.

It is the tax rate used in calculating taxable capital gains.

It is an amount resulting from dividing your total tax liability by your taxable income for the year.

It is the number used to gross-up Canadian dividend income.

NEW QUESTION 31
During the calendar year, Firmansyah received a $1,800 eligible dividend from a large Canadian bank and a foreign, dividend from his The USD/CAD exchange rates is 1.3605.
Firmansyah’s federal marginal tax bracket is 29%. The enhanced dividend gross-up rate is 38% and the federal dividend tax credit rate for eligible dividends is 15%.
What federal tax liability will be due from the investment income?

$522.00

$348.00

$695.76

$870.00

Explanation
To calculate Firmansyah’s federal tax liability from the investment income, we need to follow these steps:
Step 1: Convert the foreign dividend from USD to CAD using the exchange rate given in the question.
The exchange rate is 1.3605 CAD per USD, which means that 1 USD is equivalent to 1.3605 CAD.
Therefore, Firmansyah’s foreign dividend in CAD is:
500×1.3605=680.25
Step 2: Calculate Firmansyah’s grossed-up dividend income from both sources. A grossed-up dividend income is the actual dividend received plus a percentage of the dividend that reflects the corporate tax paid by the issuer. The percentage varies depending on whether the dividend is eligible or non-eligible.
According to [this site], an eligible dividend is a dividend paid by a Canadian corporation that meets certain criteria, such as being listed on a designated stock exchange or being a subsidiary of such a corporation. A non-eligible dividend is a dividend that does not meet these criteria, such as a dividend paid by a foreign corporation or a small Canadian business corporation. The gross-up rate for eligible dividends in 2020 was 38%, while the gross-up rate for non-eligible dividends in 2020 was 15%.
Therefore, Firmansyah’s grossed-up dividend income from both sources is:
(1800+680.25)×(1+0.38)=3426.35
Step 3: Apply Firmansyah’s federal marginal tax rate to his grossed-up dividend income to get his federal tax before credits. A marginal tax rate is the percentage of tax applied to an additional dollar of income. According to [this site], Firmansyah’s federal marginal tax rate for 2020 was 29%, as his taxable income was between $150,473 and $214,368. Therefore, Firmansyah’s federal tax before credits is:
0.29×3426.35=993.64
Step 4: Subtract Firmansyah’s federal dividend tax credit from his federal tax before credits to get his net federal tax liability from the investment income. A dividend tax credit is a percentage of the grossed-up dividend income that reflects the corporate tax paid by the issuer and avoids double taxation.
The percentage varies depending on whether the dividend is eligible or non-eligible. According to [this site], the federal dividend tax credit rate for eligible dividends in 2020 was 15%, while the federal dividend tax credit rate for non-eligible dividends in 2020 was 9.03%. Therefore, Firmansyah’s federal dividend tax credit from both sources is:
(1800+680.25)×0.38×0.15=297.88
Step 5: Subtract Firmansyah’s federal dividend tax credit from his federal tax before credits to get his net federal tax liability from the investment income. This is the amount of federal income tax that Firmansyah has to pay or has overpaid from the investment income. Therefore, Firmansyah’s net federal tax liability from the investment income is:
993.64297.88=695.76
Hence, option C is correct. References: [Canadian Investment Funds Course (CIFC) | IFSE Institute],
[Dividend Tax Credit | TurboTax Canada Tips], [Federal Income Tax Rates for Canada – TurboTax Canada Tips], [Eligible Dividends | TurboTax Canada Tips]

NEW QUESTION 32
Patrick is a portfolio manager for the HyperTally Growth Fund. It has generated an annualized rate of return of
10% this past year. However, with the anticipation of very high inflation to soon occur, there is also an expectation of higher interest rates. Patrick is concerned about the future returns of existing stocks within the fund. What may Patrick do to protect against the market value of the fund dropping?

Agree to buy forward contracts where he is in the “long’ position.

Buy call options for the existing stocks stored within the fund.

Avoid the use of derivatives because they are speculative in nature.

Purchase put options for the fund’s existing assets.

NEW QUESTION 33
Which of the following is a conflict of interest that should be AVOIDED?

Arilla’s client, Gwen, wants to co-invest with Arilla in units of a real estate limited partnership.

Davu’s client, Ester, wants him to refer her to an accountant to help her with filing her tax return.

Fred’s client, Hildie, wants to buy a life insurance policy and Fred is dually licensed as an Insurance Agent.

Jamal’s client, Laila, wants to buy the Focus Canadian Growth Fund that pays Jamal trailer fees.

NEW QUESTION 34
Which among the following plans includes a provision that places a maximum limit on the amount that can be withdrawn during a calendar year?

Life Income Fund (LIF)

Registered Retirement Savings Plan (RRSP)

Registered Retirement Income Fund (RRIF)

Deferred Profit Sharing Plan (DPSP)

NEW QUESTION 35
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?

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”.

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”.

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).

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”.

NEW QUESTION 36
Malik has been saving money for retirement but he is worried about the impact inflation may have on the value of his savings. He wants to purchase a bond that will give him a steady stream of income that is greater than the inflation rate. He has found a bond issued by a major airline with a market price of $9,200, a par value of $10,000, and a coupon rate of 6.75%. What is the current yield of this bond?

7.34%

6.75%

6.25%

6.21%

NEW QUESTION 37
Jasmine received an inheritance from her grandmother of $10,000. She wants to invest her money wisely. She has seen in the news that a particular energy company is doing very well and has good prospects. She has also seen how volatile its share price has been in the last year. She knows the risks of the resource sector and wants to invest but is not comfortable with so much volatility. Which of the following mutual fund benefits would address her concern?

convenience

low cost

diversification

liquidity

Updated Mar-2024 Exam CIFC Dumps – Pass Your Certification Exam [Q20-Q37]

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