IFSE LATEST 2026 TEST PAPER QUESTIONS AND
SOLUTIONS SCORED A+
✔✔55. A portfolio manager chooses the securities in the portfolio in an attempt to
replicate a benchmark. What type of investment strategy is this? - ✔✔passive investing
✔✔Your client wants to buy a mutual fund to provide maximum after-tax income with
minimal volatility. What would you recommend? - ✔✔Canadian dividend fund
✔✔Which of the following statements best describes systemic risk? - ✔✔The failure of a
large investment bank resulting in bringing about instability of the entire banking system.
✔✔Your client Danny informs you that he is very concerned about the future cost of his
daughter's education. Fifteen years from now when his daughter is scheduled to start
university, he wants to have $75,000 saved up for her. He asks you to implement a
savings and investment plan to meet this objective. What does Danny's request
indicate? - ✔✔explicit need
✔✔Narendra, 20, has recently started working and has invested his entire savings of
$5,000 in the ABC Canadian Toronto Stock Exchange / Standard and Poor's (TSX/S&P)
Equity Fund. The mutual fund has a beta of 0.75. What would one expect to happen to
the return on the mutual fund if the TSX /S&P Index were to decline by 20%? - ✔✔The
fund would decline by 15%.
✔✔What is the commonly witnessed behaviour of investors selling their winning
investments too early and holding their losing investments known as? - ✔✔disposition
effect
✔✔Which of the following does the Independent Review Committee of a mutual fund
have the power to oversee and approve? - ✔✔potential conflicts of interests involving
the investment fund manager
✔✔95. Ruben is a retired pensioner looking to invest $10,000. He is interested in an
income stream that receives preferential tax treatment. Which of the following
investments would be most appropriate for Ruben? - ✔✔Reliable Canadian Dividend
Fund
✔✔Which of the following statement regarding dollar-cost averaging is TRUE? - ✔✔It
reduces the risk associated with the timing of a mutual fund investment.
✔✔Manny and his wife, Missy, are in the process of purchasing a cottage. While they
are completing the transaction, they want their funds to earn some interest. The
investment must also be short-term in nature and provide them with liquidity and safety
, of principal. Which of the following income funds meets their needs? - ✔✔money market
fund
✔✔60. If a mutual fund has a front-end load of 5%, what is the purchase price per unit
paid by the investor if the net asset value per unit (NAVPU) is $10.00 at the time of
purchase? - ✔✔$10.53
✔✔Which of the following are likely to be suitable clients for a balanced fund? -
✔✔Investors looking for income and growth.
✔✔Which of the following expenses is NOT included in the calculation of a mutual
fund's management expense ratio (MER)? - ✔✔brokerage fees
✔✔Robert has a portfolio of around $100,000 which he invests in a highly concentrated
emerging markets mutual fund. He believes that the emerging markets are the markets
that one should be in to make money. He does not believe in diversifying into other
asset classes and has remained fully invested in the emerging markets. He cites the
growth rate of his portfolio as a supporting argument. What is the behavioural aspect
that Robert is exhibiting? - ✔✔overconfidence
✔✔Ted places a redemption order on Tuesday at 7:30 p.m. EST/EDT. The following are
the net asset value per unit (NAVPU) figures for the week:
MondayTuesdayWednesdayThursdayFriday$10.23$10.22$10.34$10.25$10.31
What NAVPU will Ted receive? - ✔✔$10.34
✔✔In a non-registered account, Bob has $25,000 each invested in the following mutual
funds:
dividend fund
bond fund
equity fund
specialty fund
He has unused registered retirement savings plan (RRSP) contribution room of around
$25,000 available and wants to use one of the four mutual funds as a contribution.
From a tax efficiency viewpoint, which of the following mutual funds would be the most
appropriate for Bob to move into his RRSP? - ✔✔bond fund
✔✔Dora started a registered education savings plan (RESP) for her newborn daughter
this year and contributed $3,000 to the plan. Her family income is high enough that she
does not qualify for enhanced Canada Education Savings Grant (CESG) payments.
How much will Dora receive as CESG? - ✔✔$500
✔✔90. Ogden Wells wants to start a registered education savings plan (RESP) for his
children, India Rose and Trisha, who are 2 years and 3 months old respectively. The
RESP would be a family plan where both children are beneficiaries under the same
SOLUTIONS SCORED A+
✔✔55. A portfolio manager chooses the securities in the portfolio in an attempt to
replicate a benchmark. What type of investment strategy is this? - ✔✔passive investing
✔✔Your client wants to buy a mutual fund to provide maximum after-tax income with
minimal volatility. What would you recommend? - ✔✔Canadian dividend fund
✔✔Which of the following statements best describes systemic risk? - ✔✔The failure of a
large investment bank resulting in bringing about instability of the entire banking system.
✔✔Your client Danny informs you that he is very concerned about the future cost of his
daughter's education. Fifteen years from now when his daughter is scheduled to start
university, he wants to have $75,000 saved up for her. He asks you to implement a
savings and investment plan to meet this objective. What does Danny's request
indicate? - ✔✔explicit need
✔✔Narendra, 20, has recently started working and has invested his entire savings of
$5,000 in the ABC Canadian Toronto Stock Exchange / Standard and Poor's (TSX/S&P)
Equity Fund. The mutual fund has a beta of 0.75. What would one expect to happen to
the return on the mutual fund if the TSX /S&P Index were to decline by 20%? - ✔✔The
fund would decline by 15%.
✔✔What is the commonly witnessed behaviour of investors selling their winning
investments too early and holding their losing investments known as? - ✔✔disposition
effect
✔✔Which of the following does the Independent Review Committee of a mutual fund
have the power to oversee and approve? - ✔✔potential conflicts of interests involving
the investment fund manager
✔✔95. Ruben is a retired pensioner looking to invest $10,000. He is interested in an
income stream that receives preferential tax treatment. Which of the following
investments would be most appropriate for Ruben? - ✔✔Reliable Canadian Dividend
Fund
✔✔Which of the following statement regarding dollar-cost averaging is TRUE? - ✔✔It
reduces the risk associated with the timing of a mutual fund investment.
✔✔Manny and his wife, Missy, are in the process of purchasing a cottage. While they
are completing the transaction, they want their funds to earn some interest. The
investment must also be short-term in nature and provide them with liquidity and safety
, of principal. Which of the following income funds meets their needs? - ✔✔money market
fund
✔✔60. If a mutual fund has a front-end load of 5%, what is the purchase price per unit
paid by the investor if the net asset value per unit (NAVPU) is $10.00 at the time of
purchase? - ✔✔$10.53
✔✔Which of the following are likely to be suitable clients for a balanced fund? -
✔✔Investors looking for income and growth.
✔✔Which of the following expenses is NOT included in the calculation of a mutual
fund's management expense ratio (MER)? - ✔✔brokerage fees
✔✔Robert has a portfolio of around $100,000 which he invests in a highly concentrated
emerging markets mutual fund. He believes that the emerging markets are the markets
that one should be in to make money. He does not believe in diversifying into other
asset classes and has remained fully invested in the emerging markets. He cites the
growth rate of his portfolio as a supporting argument. What is the behavioural aspect
that Robert is exhibiting? - ✔✔overconfidence
✔✔Ted places a redemption order on Tuesday at 7:30 p.m. EST/EDT. The following are
the net asset value per unit (NAVPU) figures for the week:
MondayTuesdayWednesdayThursdayFriday$10.23$10.22$10.34$10.25$10.31
What NAVPU will Ted receive? - ✔✔$10.34
✔✔In a non-registered account, Bob has $25,000 each invested in the following mutual
funds:
dividend fund
bond fund
equity fund
specialty fund
He has unused registered retirement savings plan (RRSP) contribution room of around
$25,000 available and wants to use one of the four mutual funds as a contribution.
From a tax efficiency viewpoint, which of the following mutual funds would be the most
appropriate for Bob to move into his RRSP? - ✔✔bond fund
✔✔Dora started a registered education savings plan (RESP) for her newborn daughter
this year and contributed $3,000 to the plan. Her family income is high enough that she
does not qualify for enhanced Canada Education Savings Grant (CESG) payments.
How much will Dora receive as CESG? - ✔✔$500
✔✔90. Ogden Wells wants to start a registered education savings plan (RESP) for his
children, India Rose and Trisha, who are 2 years and 3 months old respectively. The
RESP would be a family plan where both children are beneficiaries under the same
