IFC - Investment Funds in Canada Investment Products and Trading Questions and Answers

Question 1

An investor has just sold their house and needs to invest a large sum of cash for three months before purchasing a new property.
Their primary objectives are capital preservation and liquidity.
Which type of mutual fund is MOST suitable for this investor?

Accepted Answer

Money Market Fund

Answer

Equity Growth Fund

Answer

Balanced Fund

Answer

Corporate Bond Fund

Question 2

Which of the following is a primary characteristic of a cumulative preferred share?

Accepted Answer

Any missed dividend payments must be paid out to preferred shareholders before any dividends can be paid to common shareholders.

Answer

It grants the holder superior voting rights compared to common shareholders.

Answer

Its dividend payments can be deferred indefinitely without any obligation for future payment.

Answer

It gives the holder the right to convert the shares into corporate bonds at a predetermined price.

Question 3

An investor holds shares of XYZ Corp, currently trading at $50 per share. The investor wants to protect against a significant downturn and decides to sell the shares automatically if the price falls to a specific level. Which type of order should they place?

Accepted Answer

Stop-Loss Order

Answer

Market Order

Answer

Limit Order

Answer

Day Order

Question 4

What is the primary source of return for an investor who holds a stripped bond (zero-coupon bond) until maturity?

Accepted Answer

The capital gain resulting from the difference between the discounted purchase price and the bond's par value at maturity.

Answer

Regular semi-annual interest (coupon) payments.

Answer

Dividends paid out by the bond issuer.

Answer

The appreciation of the bond's price due to falling inflation.

Question 5

An investor is looking for a diversified investment in the S&P/TSX 60 index. They value the ability to buy and sell their holdings throughout the trading day at live market prices. Which product structure best meets their needs?

Accepted Answer

An Exchange-Traded Fund (ETF) tracking the index.

Answer

An open-end mutual fund tracking the index.

Answer

A segregated fund with an index-linked GIA.

Answer

A principal-protected note (PPN) linked to the index.

Question 6

Following regulatory changes implemented in May 2024, what is the standard settlement cycle for most equity and long-term debt transactions in Canada?

Accepted Answer

T+1 (Trade date plus one business day)

Answer

T+3 (Trade date plus three business days)

Answer

T+2 (Trade date plus two business days)

Answer

T+0 (Same-day settlement)

An investor has just sold their house and needs to invest a large sum of cash for three months before purchasing a new property.Their primary objectives are capital preservation and liquidity.Which type of mutual fund is MOST suitable for this investor?

An investor has just sold their house and needs to invest a large sum of cash for three months before purchasing a new property.
Their primary objectives are capital preservation and liquidity.
Which type of mutual fund is MOST suitable for this investor?