CIFC Exam Dumps - Canadian Investment Funds Course Exam

A net capital loss is the excess of allowable capital losses over taxable capital gains in a taxation year. A mutual fund trust is a type of investment fund that is structured as a trust and distributes its income and capital gains to its unit holders. A mutual fund trust cannot pass on its net capital losses to its unit holders, as it can only distribute its net income and net realized capital gains. However, a mutual fund trust can carry forward its net capital losses indefinitely and use them to offset its taxable capital gains in future years. This reduces the amount of tax payable by the mutual fund trust and increases the amount of distributions available to its unit holders. A mutual fund trust cannot carry back its net capital losses to previous years, as this option is only available to corporations12. References:

• Canadian Investment Funds Course (CIFC) Study Guide, Chapter 7: Taxation, Section 7.3: Taxation of Mutual Funds, page 7-103
• Capital Losses and Deductions - Canada.ca1
• Mutual Fund Trusts - Canada.ca2

A Canadian equity index fund would be the most tax-efficient option for Xerxes. A Canadian equity index fund is a type of mutual fund that invests in a portfolio of Canadian stocks that track a specific market index, such as the S&P/TSX Composite Index. A Canadian equity index fund would be tax-efficient for Xerxes because it would generate mostly capital gains and eligible dividends, which are taxed at lower rates than interest income or foreign dividends. A Canadian equity index fund would also have low turnover and minimal distributions, which would defer taxes until Xerxes sells his units. The other options are less tax-efficient than a Canadian equity index fund. A target date fund is a type of mutual fund that adjusts its asset allocation over time based on a predetermined retirement date. A target date fund would be less tax-efficient than a Canadian equity index fund because it would have higher turnover and more distributions, which would trigger taxes every year. A target date fund would also invest in a mix of asset classes, such as bonds and foreign equities, which would generate interest income and foreign dividends that are taxed at higher rates than capital gains and eligible dividends. A bond fund is a type of mutual fund that invests in a portfolio of fixed-income securities, such as government bonds, corporate bonds, and mortgage-backed securities. A bond fund would be less tax-efficient than a Canadian equity index fund because it would generate mostly interest income, which is taxed at the highest rate among different types of investment income. A bond fund would also have regular distributions, which would trigger taxes every year. An asset allocation fund is a type of mutual fund that invests in a portfolio of other mutual funds that cover different asset classes, such as stocks, bonds, and cash equivalents. An asset allocation fund would be less tax-efficient than a Canadian equity index fund because it would have higher fees and more distributions, which would reduce the net returns and trigger taxes every year. An asset allocation fund would also invest in a mix of asset classes, some of which would generate interest income and foreign dividends that are taxed at higher rates than capital gains and eligible dividends. References: [Canadian Equity Index Funds], [Tax-Efficient Investing], [Target Date Funds], [Bond Funds], [Asset Allocation Funds]

Grant’s appointment as Treasurer is considered an outside activity, regardless of whether he is compensated or not. According to the CIFC, Dealing Representatives must obtain their firm’s written approval before engaging in any outside activity that could interfere with their ability to perform their duties or create a conflict of interest with their clients or employer. Grant must disclose the nature and extent of his involvement with the Hockey Association and how it may affect his availability, reputation, or potential for conflicts of interest. The firm may approve, reject, or impose conditions on Grant’s outside activity.

References: Canadian Investment Funds Course, Chapter 8: Suitability and Know Your Client1

Jabir will be eligible to open new client accounts and sell investments only after he receives formal confirmation from the securities regulator that he is registered as a Dealing Representative. This is because registration is a legal requirement for anyone who trades securities or advises clients on securities in Canada, unless an exemption applies. Registration helps protect investors by ensuring that only qualified and competent individuals and firms can conduct securities related business. Jabir must also meet the proficiency, solvency, and suitability requirements for registration, as well as comply with the ongoing obligations of a registrant. Passing the proficiency course and being employed by the dealer are necessary but not sufficient conditions for registration. The dealer must apply for registration on behalf of Jabir and wait for the regulator’s approval.

References: Canadian Investment Funds Course, Unit 1, Section 1.2

Know Your Client (KYC) requirements are ongoing obligations that advisors must fulfill to ensure that they provide suitable recommendations and services to their clients. KYC requirements include collecting and documenting information about the client’s personal and financial situation, investment objectives, risk tolerance, and investment knowledge. KYC requirements also include monitoring and updating the client’s information and investment performance on a regular basis. According to the Mutual Fund Dealers Association of Canada (MFDA), advisors must review the KYC information at least once every 36 months, or more frequently if there are any material changes in the client’s circumstances or needs1. Advisors must also monitor the investment performance of the client’s portfolio and compare it with the client’s expectations and goals. If the investment performance is not satisfactory or consistent with the client’s risk tolerance, advisors must take appropriate actions, such as rebalancing the portfolio, switching funds, or revising the investment strategy2. Therefore, Harold’s responsibility moving forward is to monitor the investment performance of Felicia’s lump sum investment and determine if it is on track to satisfy her financial needs for the next 5 years. He must also review her KYC information at least once every 36 months, or sooner if there are any changes in her situation or objectives. References:

• MFDA Bulletin #0756-P - Know-Your-Client and Suitability1
• MFDA Bulletin #0760-P - Monitoring of Investment Performance2

A business cycle is a cycle of fluctuations in the aggregate economic activity of a nation around its long-term natural growth rate. It consists of four phases: expansion, peak, contraction, and trough. A period of economic expansion is followed by a period of economic contraction, which is also called a recession. A recession is defined as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales1. The other statements are not true about the movement of business cycles in the Canadian economy. The length of each phase and cycle varies depending on various factors, such as fiscal and monetary policies, external shocks, consumer confidence, and technological changes. There is no fixed rule that a period of economic expansion or contraction must last for a certain number of months or quarters. A period of at least 3 consecutive months of contraction is not sufficient to define a recession; it must also be significant and widespread across the economy. References: Business Cycle: What It Is, How to Measure It, the 4 Phases, Business Cycle - Definition, How to Measure and 6 Different Stages, Business Cycle - Definition, Phases, Graphs, Economics Examples

Unused RRSP contribution room is the amount of RRSP contributions that you did not deduct in previous years and are available to deduct in the current year. Unused RRSP contribution room can be carried forward to future years indefinitely, until you use it up or reach the age of 71. You can find your unused RRSP contribution room on your notice of assessment or by logging into your Canada Revenue Agency account. References: What to do with unused RRSP, PRPP or SPP contributions

Shirley’s risk profile is the primary consideration for Jonathan when making an investment recommendation. Risk profile is a measure of how much risk an investor is willing and able to take on in their portfolio. It is determined by factors such as age, income, net worth, investment objectives, time horizon, and personal preferences. It is essential for a dealing representative to assess the risk profile of their client before recommending any investment products or strategies, as they have a fiduciary duty to act in the best interest of their client and ensure that their recommendations are suitable for their client’s needs and goals. The other variables are also important, but they are secondary to the risk profile. References: [Risk Profile], [Know Your Client (KYC)]