IFC CISI Exam Lab Questions

 Dollar-cost averaging is a strategy that involves investing equal amounts of money at regular intervals, regardless of the price of the security. By using dollar-cost averaging, investors may lower their average cost per share and reduce the impact of volatility on their portfolios. However, this strategy does not guarantee a better purchase price than making a lump-sum purchase. In this case, David got his 500 units at a higher price than the lump sum price he would have paid. His average cost per unit was $14.65, while the lump sum price was $14.10. Therefore, D is the correct answer. References: What Is Dollar-Cost Averaging?, What Is Dollar Cost Averaging?, Dollar-Cost Averaging: Definition and Examples

The lifetime RESP contribution limit is determined per beneficiary , not per RESP contract. The IFC material states that there is no annual RESP contribution limit, but the lifetime maximum that may be contributed for each beneficiary is $50,000 . A family RESP can contain more than one beneficiary, generally family members related to the subscriber by blood or adoption. Because this family plan has three beneficiaries, each beneficiary can have up to $50,000 of lifetime contributions allocated to them. Therefore, the combined maximum is $50,000 × 3 = $150,000 . The Canada Education Savings Grant limits are separate from the RESP contribution ceiling and do not reduce the $50,000 lifetime contribution amount. Consequently, $21,600 and $16,667 do not represent the applicable contribution limit. Therefore, A is correct.

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Foreign dividend income is taxed at the investor’s marginal tax rate without the benefit of a dividend tax credit, unlike Canadian dividend income, which qualifies for a tax credit. The feedback from the document states:

" Foreign dividend income is not eligible for any dividend tax credit, and is taxed at an investor’s marginal tax rate. "

The difference between nominal GDP and real GDP is the effect of changes in the prices of goods and services. Nominal GDP measures the value of final output using current-period prices, so it can increase either because more goods and services are produced or because prices rise. Real GDP removes the effect of price changes by valuing production using constant prices. Consequently, real GDP is used to identify changes in actual economic output rather than changes caused merely by inflation. The IFC material describes inflation as a general increase in the prices of goods and services and explains that rising prices reduce purchasing power. Government spending and foreign consumption are components affecting GDP itself, while corporate profits are not the adjustment distinguishing nominal from real GDP. Therefore, B is correct.

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