Cisco
CompTIA
ISC
EC-Council
EXIN
Fortinet
ITIL
Juniper
Microsoft
VMware
Avaya
SAP
Google
NVIDIA
Salesforce
Amazon
Palo Alto Networks
ISC2
Splunk
ServiceNow
All Vendors
  2. Home
  3. Exams
  4. CSI
  5. IFC

CSI IFC Exam Questions
Investment Funds in Canada (Page 16 )

Updated On: 28-Feb-2026
Page 16 of 99
PDF with 486 Questions

Which drawback of the comparison universe method makes average fund managers look more like underperformers as the comparison period lengthens?

  1. Survivorship bias
  2. Definition of universes
  3. Matching of risk profiles
  4. Universe size

Answer(s): A

Explanation:

Survivorship bias occurs when underperforming funds are terminated and excluded from performance rankings, making surviving funds appear to perform better over time. The feedback from the document states:

"All comparison universes exhibit some degree of survivorship bias no matter how carefully the universes are constructed. Survivorship bias develops as defunct portfolios drop out and are excluded from rankings in subsequent quarters. Funds that are terminated or cease to exist are usually those who have been unsuccessful, creating an upward bias in the returns of longer-run funds in the surviving universe."


Reference:

Chapter 14 ­ Understanding Mutual Fund PerformanceLearning Domain: Evaluating and Selecting Mutual Funds



What type of fund offers the highest expected risk and the highest expected return in terms of the risk-return trade-off between different types of mutual funds?

  1. Mortgage fund
  2. Canadian Equity fund
  3. Specialty fund
  4. Real estate fund

Answer(s): C

Explanation:

Specialty funds, due to their focused and often speculative investments, carry the highest expected risk and return among mutual funds. The feedback from the document states:

"The highest risk, highest expected return mutual fund is a specialty fund."


Reference:

Chapter 15 ­ Selecting a Mutual FundLearning Domain: Evaluating and Selecting Mutual Funds



A fund manager has diversified the equity portfolio he manages in order to reduce the potential negative impact of unfavorable information relating to any one stock.
What type of risk has he reduced?

  1. Default risk
  2. Interest rate risk
  3. Market risk
  4. Unique risk

Answer(s): D

Explanation:

Unique risk, also known as firm-specific risk, is reduced through diversification, as it relates to volatility caused by information specific to individual securities. The feedback from the document states:

"If a security's price is affected by new information, and if new information arrives frequently, then its price will tend to be volatile and so will the returns that it generates. This source of volatility is specific to a given security and is known as unique risk. Diversifying a portfolio reduces unique risk."


Reference:

Chapter 15 ­ Selecting a Mutual FundLearning Domain: Evaluating and Selecting Mutual

Funds



You are comparing the performance of ABC Equity Fund and XYZ Equity Fund to their benchmark.
Indicate the correct statement.

Return | Year 1 | Year 2 | Year 3 | 3 Year Compound Return

Benchmark | -2.0% | 12.6% | 20.6% | 10.0%

ABC Equity Fund | -10.0% | 16.0% | 24.0% | 9.0%

XYZ Equity Fund | 8.0% | 9.0% | 10.0% | 9.0%

  1. Fund XYZ would have offered a lower likelihood of loss if a client needed to sell the investment
  2. Fund ABC showed greater consistency in its simple annual returns
  3. Fund ABC demonstrated a superior performance in a bearish market
  4. Fund XYZ offered less protection on the downside

Answer(s): A

Explanation:

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."


Reference:

Chapter 15 ­ Selecting a Mutual FundLearning Domain: Evaluating and Selecting Mutual Funds



What type of fee does a mutual fund sponsor often reduce the longer an investor holds a back-end load fund?

  1. Sales fee
  2. Acquisition fee
  3. Redemption fee
  4. Trailer fee

Answer(s): C

Explanation:

Back-end load funds often have a decreasing redemption fee (deferred sales charge) schedule, which reduces the longer the investor holds the fund. The feedback from the document states:

"Fund sponsors use a decreasing redemption fee (deferred sales charges) schedule to recover their costs from investors who opt out of the fund early. In most cases, redemption fees on a back-end load fund decrease the longer the investor holds the fund."


Reference:

Chapter 16 ­ Mutual Fund Fees and ServicesLearning Domain: Evaluating and Selecting Mutual Funds



Viewing page 16 of 99
Viewing questions 76 - 80 out of 486 questions



Post your Comments and Discuss CSI IFC exam dumps with other Community members:

IFC Exam Discussions & Posts

AI Tutor