Pass the CSI Canadian Securities Course IFC Questions and answers with CertsForce

A DPSP is a type of registered plan that allows employers to share their profits with their employees. Employees do not contribute to a DPSP, and they do not pay taxes on the contributions until they withdraw them. Employers can deduct their contributions to a DPSP from their taxable income, subject to certain limits and conditions.

References = IFSE CIFC Module 6: Registered Plans, page 6-12. Contributing to a deferred profit sharing plan - Canada.ca

Fixed assets are long-term tangible assets used in business operations, not held for resale (e.g., land, buildings, machinery, equipment, computers).

Marketable securities (A) are current assets (short-term investments).

Inventories (B) are current assets.

Trade receivables (D) are current assets (accounts receivable).

Jabir will be eligible to open new client accounts and sell investments only upon formal confirmation from the regulator. Before he can start his activities as a dealing representative, he must complete the registration process, which includes passing the proficiency course, applying for registration through his dealer, and obtaining approval from the securities regulator in his jurisdiction. References: Guide to Broker-Dealer Registration

Canadian preferred share funds distribute income in the form of eligible Canadian dividends, which are tax-advantaged through the dividend tax credit.

In contrast:

U.S. preferred dividends are taxed as foreign income, fully taxable without credits.

Mortgage and bond funds generate interest income, which is fully taxable at the investor’s marginal rate.

Therefore, the most tax-advantaged distribution comes from a Canadian preferred share fund.

The correct answer is C. Deposit transactions of $10,000 CDN or more. Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), as outlined in Investment Funds in Canada, securities dealers and mutual fund dealers are required to report large cash transactions to FINTRAC.

A large cash transaction is defined as a cash deposit of $10,000 or more in a single transaction or multiple transactions within a 24-hour period. This reporting obligation applies regardless of whether the transaction appears suspicious. The objective is to detect and deter money laundering and terrorist financing activities.

Cross-border reporting rules are different and involve specific criteria. Transactions of $5,000 do not meet the reporting threshold. Not all $10,000 transactions are reportable—only cash deposits fall under this mandatory reporting rule.

The CIFC curriculum stresses that understanding reporting thresholds is a critical compliance responsibility for dealing representatives. Therefore, Option C is the correct and fully CIFC-aligned answer.

The custodian, typically a trust company, receives and holds all funds from investors and other sources, managing the fund’s assets and expenses. The feedback from the document states:

"The Custodian. When a mutual fund is established, a separate organization, most often a trust company, is appointed as the fund’s custodian. The custodian receives and holds the fund’s money obtained from all sources – investors buying the fund’s units or shares, income earned by the fund’s investment portfolio, proceeds from the sale of the fund’s investments, holds all the fund’s assets and distributes the fund’s money to pay the fund’s expenses."

A passively managed fund is a type of investment fund that follows a predetermined strategy or rule to track the performance of a market index, such as the S&P 500, or a specific sector, such as technology or health care. A passively managed fund does not involve active decision-making by the fund manager, who simply replicates the composition and weighting of the index or sector. A passively managed fund aims to match the return and risk of the index or sector, rather than outperform it. A passively managed fund typically has lower fees and expenses than an actively managed fund, as it requires less research, trading, and oversight.

An exchange traded fund (ETF) is a type of passively managed fund that trades on a stock exchange like a common stock. An ETF holds a basket of securities that mirrors an index or sector, and its price fluctuates throughout the day based on supply and demand. An ETF allows investors to gain exposure to a diversified portfolio of securities with low costs, high liquidity, and tax efficiency.

A commodity pool is a type of investment fund that invests in futures contracts or options on commodities, such as oil, gold, or wheat. A commodity pool is usually actively managed by a commodity trading advisor (CTA), who uses various strategies to generate returns from the price movements of commodities.

A hedge fund is a type of investment fund that employs sophisticated and often aggressive strategies to achieve high returns and reduce risk. A hedge fund is usually actively managed by a hedge fund manager, who has wide discretion and flexibility to use various instruments, such as derivatives, leverage, short selling, arbitrage, etc. A hedge fund is typically available only to accredited investors who meet certain income and net worth criteria.

A labour-sponsored investment fund (LSIF) is a type of investment fund that provides venture capital to small and medium-sized Canadian businesses, while offering tax benefits to investors. An LSIF is usually actively managed by a labour union or an organization affiliated with a labour union, who selects the companies to invest in based on their potential for growth and job creation.

Canadian Investment Funds Course, Chapter 4: Types of Investments1

The correct answer is C. Liquidity. According to the Investment Funds in Canada curriculum, the primary objectives of money market mutual funds are capital preservation and liquidity, with income as a secondary consideration. Money market funds invest in short-term, high-quality debt instruments such as treasury bills, bankers’ acceptances, and commercial paper, which mature in less than one year.

The CIFC text emphasizes that money market funds are designed to provide investors with easy access to cash, making liquidity their most important feature. These funds typically maintain a stable net asset value per unit (NAVPU), allowing investors to redeem units quickly with minimal price fluctuation.

Tax efficiency is not a defining feature of money market funds, as interest income is fully taxable in non-registered accounts. Money market funds also do not provide an inflation hedge because returns are generally modest and may not keep pace with rising prices. Yield is intentionally low relative to other asset classes because higher yields usually require higher risk, which contradicts the fund’s conservative mandate.

Because liquidity is the cornerstone of money market fund design and suitability, Option C is the correct and fully CIFC-verified answer.

One of the steps in the Know Your Client (KYC) rule is to assess the client’s financial resources, which include their income, assets, liabilities, and net worth. Asking about pension plans at work is a relevant question to determine the client’s sources of income and potential retirement savings. Pension plans can also affect the client’s risk tolerance and investment objectives, as they may provide a stable and guaranteed income in the future. Asking about children, money needs, and investment experience are also important questions, but they relate to other aspects of the KYC rule, such as personal circumstances, time horizon, and investment knowledge. References:

Canadian Investment Funds Course (CIFC) Study Guide, Chapter 1: The Investment Funds Industry, Section 1.4: The Know Your Client (KYC) Rule, page 1-111

Know Your Client (KYC) Definition - Investopedia