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

Fund XYZ’s more consistent annual returns (less variation) reduce the likelihood of selling at a loss, especially in volatile markets. The feedback from the document states:

"After finding comparable funds with good long-term performance, look for funds with the best performance from year to year. In comparing two funds, the one with less variation in simple rates of return from year to year is a more consistent performer. Although equity funds are intended for the long-term, if liquidity is needed, the fund with a more consistent performance is less likely to be sold at a loss."

Comprehensive Explanation with CSC References:

The process of selecting specific industries (sectors) from which stocks are chosen is called sector weighting.

Strategic asset allocation (A) refers to long-term allocation among asset classes (stocks, bonds, cash).

Market timing (C) is an attempt to profit from predicting market movements.

Passive management (D) involves tracking an index with little or no active stock/sector selection

The correct answer is A. Bank rate. The Investment Funds in Canada curriculum defines the bank rate as the minimum rate at which the Bank of Canada makes short-term loans to major financial institutions, including chartered banks. It serves as a key benchmark in the Canadian financial system.

The prime rate is set by individual banks and is typically higher than the bank rate. The nominal rate simply refers to the stated interest rate without inflation adjustment. The target rate (overnight rate target) is the Bank of Canada’s policy objective, not the actual lending rate.

Because the question asks specifically for the minimum lending rate, the correct and CIFC-verified answer is Option A.

PIPEDA (Personal Information Protection and Electronic Documents Act) requires firms to obtain informed consent when collecting, using, or disclosing personal information.

B (prohibit disclosure) is too absolute; exceptions exist (e.g., legal requirements).

C (verify client ID) is under AML rules, not PIPEDA.

D (must provide service if info refused) is incorrect; firms may deny services if info is not provided.

Money market funds are safe investments because their net asset value per unit does not usually fluctuate. Money market funds invest in highly liquid instruments like high-interest savings accounts, term deposits, short-term debt securities, cash equivalents, and other low-risk, short-term investments3. These funds aim to preserve capital and provide liquidity while generating some income3. Money market funds typically have a stable net asset value per unit (NAVPU) that does not change much over time3. The other statements are false. Money market funds do not provide high returns without risking the capital invested. Money market funds offer low returns that may not keep up with inflation or meet long-term investment goals3. Money market funds also have some risks, such as credit risk, interest rate risk, and liquidity risk3. Money market funds do not pay income weekly which can be automatically reinvested. Money market funds may pay income monthly, quarterly, semi-annually, or annually, depending on the fund’s distribution policy3. Investors can choose to receive cash distributions or reinvest them in more units of the fund3. Money market funds do not provide investors a guaranteed fixed rate of return. Money market funds do not guarantee any return or principal amount3. The return of money market funds depends on the interest rates and yields of the underlying investments, which may vary over time3. References: 7 Best Money Market ETFs in Canada 2023: Cash And HISA ETFs, Best Money Market Funds in Canada | WOWA.ca, 3 Best Canadian Money Market Funds (2023) - PiggyBank

Loretta is looking for a well diversified equity fund that invests both within and outside Canada. She also wants a fund that invests in quality companies, which implies that she prefers lower risk and higher stability. A global equity fund would meet her criteria, as it can invest in any country, including Canada, and diversify across different regions and markets. A global equity fund that focuses on large, established companies, also known as blue chip stocks, would also suit her preference for quality and stability, as these companies tend to have strong financial performance, competitive advantages, and consistent dividends. Therefore, the Polar Global Blue Chip Equity Fund would be the best choice for Loretta among the given options.

Canadian Investment Funds Course, Unit 6, Section 6.2

Direct investment means the investor owns the asset directly, e.g., real estate property, stocks, or bonds held personally.

Mutual funds (B) are indirect investments since they pool money.

Government bonds (C) can be direct if held individually, but in CSC context, examples of direct investments often emphasize real estate ownership as the clearest form.

Advisor purchases stocks for a client (D) is indirect because the advisor acts on behalf of the client.