IFC Exam Dumps - Investment Funds in Canada (IFC) Exam

An income statement is a financial report that shows the earnings and expenses of a business over a period of time, such as a month, a quarter, or a year. It also shows the net income or net loss of the business, which is the difference between the total revenues and the total expenses. An income statement helps investors and creditors evaluate the profitability, performance, and risk of a business. The other options are not accurate descriptions of an income statement. Option A describes retained earnings, which are part of the equity section of the balance sheet. Option B describes contributed capital, which is also part of the equity section of the balance sheet. Option D describes the balance sheet, which is another financial statement that shows the assets, liabilities, and equity of a business at a specific point in time. References: Income Statement - Definition, Explanation and Examples, Income Statement: How to Read and Use It - Investopedia, How to Prepare an Income Statement | HBS Online

The correct answer is D. More risk than a dividend fund, but less risk than an equity fund. The Investment Funds in Canada curriculum explains that mortgage funds invest primarily in residential and commercial mortgages, generating income from interest payments.

Mortgage funds carry credit risk, interest rate risk, and liquidity risk, making them riskier than traditional dividend or fixed-income funds, which often hold publicly traded securities. However, they are generally less volatile than equity funds, which are subject to broader market fluctuations and business risk.

Dividend funds typically invest in established companies with stable cash flows and are therefore less risky than mortgage funds. Equity funds expose investors to full market risk and price volatility, placing them at a higher risk level than mortgage funds.

The CIFC course places mortgage funds in the mid-risk spectrum, between income-oriented equity funds and growth-oriented equity funds. Therefore, Option D is the correct and fully CIFC-verified answer.

Specialty funds are narrowly focused and often risky on their own. However, when combined with other asset classes, they can add diversification benefits, especially if their returns have a low correlation with other portfolio holdings .

Holding high beta securities increases risk.

Using derivatives may increase returns but not reduce risk.

Fewer sectors = higher concentration risk.

Therefore, risk mitigation comes from low-correlation diversification.

The financial planning pyramid illustrates the risk-return spectrum of investments. For a very aggressive investor, high-risk securities like OTC securities are suitable. The feedback from the document states:

"As a visual aid, the planning pyramid helps you show clients how mutual funds fit into the investment universe. A very aggressive investor could consider investments such as OTC Securities."

The Investment Funds in Canada course clearly states that proficiency requirements are time-sensitive and that an individual must become registered within a specified period after completing the required examinations. According to CIFC registration rules, an individual may remain unregistered for up to one year after successfully completing the proficiency exams without having to rewrite them.

The course explains that registration is not automatic upon passing exams; rather, registration is granted only after regulatory approval. If an individual does not apply for or obtain registration within the allowed timeframe, their proficiency is considered expired, and the examinations must be rewritten to ensure current knowledge of regulations, products, and compliance obligations.

The one-year limit exists because the Canadian securities industry is highly regulated and subject to frequent rule changes. The CIFC curriculum emphasizes that “registration requirements are designed to ensure individuals remain current and competent,” and prolonged periods outside the industry may compromise investor protection.

The other options are incorrect because CIFC does not recognize 90 days, 180 days, or three years as valid unregistered grace periods. Only one year is recognized by securities regulators and self-regulatory organizations such as the MFDA and provincial securities commissions.

Therefore, Option D is the correct and fully verified answer.

A tax trap is a situation where an investor buys a mutual fund just before its ex-dividend date and ends up paying taxes on the distributions that they receive shortly after. This reduces their after-tax return and erodes their capital. To avoid the tax trap, it is advisable to buy the mutual fund after the ex-dividend date, when the fund’s net asset value (NAV) drops by the amount of the distribution. This way, the investor does not receive any taxable income and preserves their capital. Therefore, you should advise Charlie to purchase the Sentinel Canadian Equity Fund after December 20, when the fund goes ex-dividend.

Canadian Investment Funds Course, Unit 8, Section 8.2; 4; 5; 6

Withdrawals under a ratio withdrawal plan are based on the current portfolio value, ensuring the fund is never fully depleted unless a 100% payout ratio is used. The feedback from the document states:

"Under a ratio withdrawal plan, the ratio is always based on the current portfolio value. Technically, this means that clients will never fully exhaust their mutual fund investment under this type of plan. Only in the unrealistic situation of a 100% payout ratio would the fund be completely paid out."