Practice Test Geeks(CIFC) Canadian Investment Funds Course Practice Test
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Risk Assessment and Financial Planning Flashcards

7 cards from real CIFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Risk Assessment and Financial Planning flashcards as text

  1. Under MFDA suitability rules, how frequently must a dealer representative review client KYC information at minimum?

    Answer: Annually

    MFDA rules require annual KYC reviews to ensure the client's recorded information remains current and recommendations remain suitable.

  2. An investor with a 20-year horizon wants to fund retirement. Using the concept of dollar-cost averaging, what is the key benefit during market downturns?

    Answer: More units are acquired at lower prices, reducing average cost per unit

    Dollar-cost averaging means fixed contributions buy more units when prices fall, naturally lowering the average cost per unit over time.

  3. Which of the following is a key characteristic of a balanced mutual fund?

    Answer: Holds a mix of equities and fixed income to moderate risk

    A balanced fund combines equities and fixed income to provide moderate growth while limiting volatility, suited to moderate-risk investors.

  4. A client's net worth is $2M but 90% is in illiquid real estate. What concern does this raise in financial planning?

    Answer: Liquidity risk if cash is needed quickly

    High illiquid asset concentration creates liquidity risk because the client may not be able to quickly access funds during emergencies.

  5. When constructing a client's financial plan, which step comes FIRST?

    Answer: Establishing the client's goals, time horizon, and financial situation

    The foundation of any financial plan is gathering comprehensive information about the client's goals, time horizon, and current financial situation before any recommendations.

  6. Which of the following BEST illustrates reinvestment risk?

    Answer: A bond maturing and proceeds being reinvested at lower prevailing rates

    Reinvestment risk occurs when proceeds from a matured or called bond must be reinvested at lower interest rates than the original investment.

  7. A mutual fund's beta is 1.4 relative to its benchmark. What does this indicate about its risk profile?

    Answer: The fund is expected to move 40% more than the benchmark in either direction

    A beta of 1.4 means the fund is expected to move 1.4 times the benchmark's movement, indicating higher volatility than the market.

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