IFSE Institute CIFC Exam With Confidence Using Practice Dumps

The investment objective for the $10,000 currently sitting in Lucas’s RRSP is safety of principal, which means that he wants to preserve the value of his investment and avoid any loss of capital. Safety of principal is a suitable objective for Lucas because he plans to withdraw the money in two months for the LLP, which is a very short time horizon. He does not need to generate any income or growth from his investment, as he will use the money to pay for his education expenses. He also does not need to worry about tax-deferral, as the LLP allows him to withdraw money from his RRSP without paying any tax, as long as he meets the eligibility and repayment requirements1. Therefore, Lucas should invest his money in low-risk and liquid assets, such as money market securities or guaranteed investment certificates (GICs), that will protect his principal and ensure that he can access his funds when he needs them. References:

• Canadian Investment Funds Course (CIFC) Study Guide, Chapter 6: Registered Plans, Section 6.4: Lifelong Learning Plan (LLP), page 6-132
• Lifelong Learning Plan (LLP) - Canada.ca1

D is correct because Sujay’s registered retirement savings plan (RRSP) contribution room for the year will be reduced by $3,600. This is because his employer’s defined contribution pension plan is considered a registered pension plan (RPP), which affects his RRSP contribution room through a pension adjustment (PA). The PA is calculated as 18% of his earned income in the previous year minus his RPP contributions in the current year. In this case, Sujay’s PA for the current year is $3,600, which is 18% of his $60,000 salary minus his 3% contribution ($1,800) and his employer’s 3% contribution ($1,800). The PA reduces his RRSP contribution room for the next year by the same amount. It will have an effect on his RRSP contribution room (A), as it is not based on earned income only, but also on RPP contributions. It will not reduce his contribution room by $51,800 (B), as this is more than his earned income. It will not reduce his contribution room by $10,800 ©, as this is 18% of his earned income without subtracting his RPP contributions. References: Canadian Investment Funds Course (CIFC) | IFSE Institute

A is correct because mortgage mutual funds typically pay monthly distributions of interest to their investors, as they invest in mortgages that generate regular interest income. If interest rates fall, the mutual fund’s net asset value per unit (NAVPU) will increase (B), not decline, as the value of the existing mortgages in the fund will rise. Mortgage mutual funds are suitable for low to moderate risk investors ©, not only for high risk investors, as they provide stable income and capital preservation. Mortgage mutual funds are not risk-free (D), even if the mortgages are National Housing Act (NHA) insured, as they still face credit risk, interest rate risk, and liquidity risk. References: Investment Funds in Canada (IFC) | Canadian Securities Institute