CSI Updated IFC Exam Questions and Answers by emilie

Survivorship bias occurs when funds that have failed, closed, merged, or otherwise ceased to exist are removed from a performance comparison universe. Because unsuccessful funds are disproportionately likely to disappear, the funds remaining in the universe tend to have better results, causing historical performance statistics to appear stronger than they actually were for the complete original population. IFC explains that defunct portfolios drop out of subsequent rankings and that these terminated portfolios are usually unsuccessful, producing an upward bias in the longer-term returns of the surviving universe. Options A through C describe mismatches between investment mandates, asset categories, or risk profiles rather than survivorship bias. Therefore, the exclusion of defunct portfolios described in option D is the defining characteristic.

================

In a tenants in common account, each owner holds a pro-rata share (e.g., 50%) and can only issue instructions for their portion, with no right of survivorship. KYC information is required for both owners. The feedback from the document states:

" If more than one person owns an account and it is not specifically identified as being a joint account, each owner owns a pro-rata share of the account, unless ownership is divided in another manner and noted on the account. Where an account is held as tenants in common, there is no right of survivorship and each owner, unless otherwise specified, can only give instructions with regard to the pro-rata portion of the account. "

The requirement described is Know Your Product (KYP) . Under the Client Focused Reforms, registered firms must establish a product-review process for securities made available to clients. This includes assessing relevant features, structure, risks, initial and ongoing costs, and other characteristics; approving securities before they are placed on the firm ' s product shelf; and monitoring them for significant changes. The IFC material similarly describes KYP as requiring dealing representatives to understand the products they purchase, sell, or recommend, including their features, risks, costs, and suitability implications. Suitability is related but represents the subsequent determination that an investment action is appropriate for a particular client. Current CSA guidance confirms that securities made available to clients must be assessed, approved and monitored through the firm ' s KYP process. Therefore, B is correct.

================

In a deflationary environment, prices of goods and services fall. This leads to:

Lower corporate profits (as companies sell at lower prices)

Lower interest rates (to stimulate borrowing)

But personal savings increase because consumers delay purchases expecting lower future prices.

Therefore, the correct answer is Personal savings.