CIFC Professional Ethics and Standards 2

Question 1

Under CIFC standards, what is the primary obligation of a mutual fund salesperson when a client's investment objectives conflict with a suitable product recommendation?

Accepted Answer

Prioritize the client's best interests over personal gain

Answer

CIFC ethics require that client interests always take precedence over the salesperson's personal financial gain.

Question 2

Which of the following best describes 'churning' in the context of mutual fund sales?

Accepted Answer

Excessive trading in a client's account to generate commissions

Answer

Churning is the unethical practice of excessive trading primarily to generate commissions rather than serve the client's interests.

Question 3

A registrant discovers that their firm has made an error that harmed a client financially. What is the ethical course of action?

Accepted Answer

Disclose the error to the client and work to resolve it promptly

Answer

Ethical standards require prompt disclosure of errors to clients and taking steps to remedy any resulting harm.

Question 4

What does 'know your product' (KYP) require a mutual fund representative to do?

Accepted Answer

Understand the features, risks, and costs of the products they recommend

Answer

KYP requires representatives to have sufficient product knowledge to assess suitability and explain risks and costs to clients.

Question 5

Under Canadian securities regulations, when must a registrant update a client's Know Your Client (KYC) information?

Accepted Answer

When there is a significant change in the client's circumstances or at least every 2 years

Answer

KYC information must be kept current; updates are required when significant life changes occur or on a regular periodic basis.

(CIFC) Canadian Investment Funds Course Practice Test

(CIFC) Canadian Investment Funds Course Practice Test

CIFC Professional Ethics and Standards 2