CSI Updated IFC Exam Questions and Answers by greta

A conflict of interest is a situation in which a person’s personal interests conflict with their professional duties or responsibilities. A conflict of interest should be avoided or disclosed to prevent harm to the client or the registrant. In this case, Arilla’s client, Gwen, wants to co-invest with Arilla in units of a real estate limited partnership. This is a conflict of interest because Arilla may have a personal interest in the investment that could influence her advice to Gwen or affect her ability to act in Gwen’s best interest. For example, Arilla may benefit from the investment at Gwen’s expense, or she may have access to information that Gwen does not have. Therefore, this is a conflict of interest that should be avoided by Arilla. She should decline Gwen’s offer and explain that it would compromise her professional obligations and fiduciary duty to Gwen.

Canadian Investment Funds Course, Unit 2, Section 2.3

When a mutual fund makes a distribution, its net asset value per unit (NAVPU) decreases by the amount of the distribution. Therefore, the new NAVPU of XYZ Fund after the distribution was $$(16.50 - 1.50 = 15.00)

A lower standard deviation indicates lower volatility and thus lower risk. Fund B, with a standard deviation of 2%, is less risky than Fund A, with a standard deviation of 5%. The feedback from the document states:

"We can find the probable range of returns as follows: Average Return + Standard deviation = Positive outcome. Average Return - Standard deviation = Negative outcome. In any given year Fund A, which has the higher standard deviation, could fluctuate much more widely, making it less attractive as an investment, even over the long-term. Volatility is the most common measure of risk."