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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Securities, managed products, mutual funds and other investments | 19% | - Types, features, risks and returns of equities - Considerations affecting managed product investors - Types, features, risks and returns of fixed income securities and products - Asset classes generally sold and traded at an Investment Dealer - Features, risks and returns of managed products - Considerations affecting mutual fund investors - Considerations affecting fixed income investors - Considerations affecting exchange-traded fund investors - Types of pooled products - Purpose and uses of market indices - Other investments including hedge funds, structured products, alternative investment funds, crypto assets and ESG-related products - Considerations affecting equity investors and potential shareholders |
| Topic 2: Scope of client relationships | 15% | - Trust, agency and fiduciary duty - Purpose and content of relationship disclosure - Typical services provided by institutional Investment Dealers - Institutional client sophistication assessment and suitability exemptions - Know-your-product obligations - Requirements for working with clients in the United States and other foreign jurisdictions - Systematic approaches to investment management and investment strategies - Account appropriateness obligations - Product due diligence obligations - Investment performance benchmarks - Account appropriateness versus suitability determination - Exemptions from suitability determination requirements - Typical services provided by retail Investment Dealers - Suitability determination requirements for retail clients - Internal escalation procedures and subject matter experts - Role of the Registered Representative in providing client service - Role of the Investment Representative in providing client service |
| Topic 3: Derivatives | 5% | - Listed versus over-the-counter derivative markets - Single and multi-legged derivative trading strategies - Prohibited derivative trading practices - Basic uses of derivatives - Basic transactional elements of futures and options - Features of other derivative contract types - Features of options contract types - Administrative requirements for derivative trading with clients |
| Topic 4: Overview of Canadian securities regulatory framework | 10% | - Criminal Code and its application to financial crime - Role and authority of the Canadian Securities Administrators and provincial and territorial securities and derivatives regulators - Role and authority of the Canadian Investment Regulatory Organization - Other applicable laws including confidentiality, privacy, anti-spam, company disclosure and shareholder rights - Investment Dealer registration and individual approval requirements - Function and purpose of investment industry marketplaces - Purpose and implications of the Bank Act and Bankruptcy and Insolvency Act - Function and purpose of other investment industry regulators and agencies - Function and purpose of the Canadian Investor Protection Fund - Function and purpose of clearing agencies - Anti-money laundering and anti-terrorist financing legislation and regulations |
| Topic 5: Prospective client relationships | 10% | - Retail client information collection - Third parties and other professionals in the client's life - Differences between retail and institutional clients - Investment Dealer onboarding process - Client record documentation, filing and maintenance - Exemptions under National Instrument 45-106 - Client relationship model - Role of cost in product selection - Impact of fees, turnover and taxes on investment returns - Institutional client qualification requirements - Required account agreement and Firm Welcome package documents |
| Topic 6: Client complaint handling and reporting | 5% | - Potential client issues, liability and consequences - Policies and procedures for reporting, handling and maintaining complaint records - Recourse available to dissatisfied clients - Investment Dealer obligations to clients - Prohibited practices in client settlement agreements - Investment Dealer complaint reporting obligations and penalties - Role of CIRO and provincial regulators in the complaints handling framework |
| Topic 7: Market and company analysis | 8% | - Factors influencing the macroeconomy - Industry performance analysis - Basic economic theories - Technical and statistical analysis tools and information sources - Basic market theories and stock market behaviour - Rules relating to companies - Effects of macroeconomic factors on financial markets - Economic indicators and sources of information - Company performance analysis tools |
| Topic 8: Conflicts of interest and ethics | 15% | - Conflicts of interest management process - CIRO and other ethical standards of conduct - Requirements regarding positions of influence - Importance of managing conflicts of interest - Client confidentiality policies and procedures - Activities outside an Investment Dealer - Inappropriate or prohibited personal financial dealings with clients - Importance of ethics and its relationship to rules - Role of cybersecurity in protecting confidential information - Information controls, barriers, firewalls and restricted lists - Ethical principles and standards of conduct for Approved Persons and Investment Dealers - Ethical and legal responsibilities to clients |
| Topic 9: Market integrity, trade execution and settlement | 12% | - Features of different account types - Order confirmation requirements - Order variations, cancellations and corrections - Functions of investment banking, research and corporate finance - Gatekeeping requirements for manipulative and deceptive practices, unacceptable activities and front running - Reporting obligations to firms and regulators - Features of different order types - UMIR gatekeeping obligations - Margin requirements - Specialized trading agreements for derivative accounts - Order entry, trade management, settlement and delivery - Universal Market Integrity Rules |
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NEW QUESTION # 65
When must an Investment Dealer consult with a client's trusted contact person?
Answer: B
Explanation:
The correct response is A . Under CIRO's Know-Your-Client requirements, a Dealer Member must take reasonable steps to obtain the name and contact information of a trusted contact person (TCP) , together with the client's written consent permitting contact. IDPC Rule 3202(4) provides for contact with the TCP regarding specified protective matters, including "possible financial exploitation of the client" and concerns about the client's mental capacity as it relates to making financial decisions. A therefore identifies the prescribed circumstances relevant to TCP contact.
A TCP is a protective contact, not a substitute decision-maker, attorney under a power of attorney, or person automatically authorized to direct transactions. Contact remains governed by the client's written consent and the limited purposes specified in the rule. D is therefore incorrect: routine account-performance information is not disclosed merely to obtain an objective opinion. B is incorrect because missing KYC information is addressed through KYC, documentation, account-opening and account-restriction procedures rather than by consulting the TCP. C is incorrect because disagreement with a competent client's investment decision is not itself a TCP-contact purpose.
The CIRE syllabus specifically identifies the trusted contact person as a third party whose role an Investment Dealer must understand, identify and document.
Study Guide Reference: CIRE Element 2.7 - role of third parties and trusted contact persons; IDPC Rule 3202(4).
NEW QUESTION # 66
Retail Investment Dealers may offer a range of accounts to clients. Which of the following best reflects that range?
Answer: D
Explanation:
The correct answer is A . The CIRE syllabus expressly identifies the typical services provided by a retail Investment Dealer as order execution only, advisory, managed and discretionary . These service models differ principally in the degree of advice and decision-making authority exercised by the client and the Dealer or representative.
In an OEO account , the client makes investment decisions and the Dealer executes orders without providing recommendations. In an advisory account , a Registered Representative may provide recommendations, but the client retains final authority over each transaction. A managed account delegates ongoing discretionary investment-management authority to an appropriately approved Portfolio Manager according to the account mandate. A discretionary account also permits specified discretionary trading authority, subject to CIRO's regulatory limitations, documentation and supervisory requirements.
B is incorrect because Direct Electronic Access (DEA) is not included by the CIRE syllabus as one of the typical retail Investment Dealer service categories. DEA concerns electronic access and routing arrangements to marketplaces and appears under the market-integrity framework rather than the standard list of retail account services. C omits OEO accounts, while D omits managed accounts.
Study Guide Reference: CIRE Element 3.5 - Typical services provided by retail Investment Dealers; Element 6.9 - features of account types.
NEW QUESTION # 67
A central bank raises interest rates to address rising inflation. What is the most likely effect of this policy on the economy?
Answer: B
Explanation:
The correct answer is C . Raising policy interest rates is a form of contractionary monetary policy . Higher interest rates increase the cost of borrowing for households and businesses and generally increase the incentive to save rather than spend. Consequently, demand for interest-sensitive expenditures-including housing, durable goods and business investment-typically weakens. As aggregate demand slows relative to the economy's productive capacity, upward pressure on prices diminishes, helping bring inflation lower over time.
The Bank of Canada describes this transmission mechanism directly. Following rate increases, debt servicing and new borrowing become more expensive, households tend to spend less and save more , and demand growth slows. The Bank notes that monetary policy affects demand first and inflation afterward because the transmission process operates with a lag.
A and B describe the opposite of the intended effect of tighter monetary policy. Stronger spending and demand would normally increase rather than reduce inflationary pressure. D is also incorrect because higher borrowing costs generally discourage marginal borrowing by consumers and businesses instead of stimulating it.
The precise economic effect depends on factors such as household indebtedness, credit conditions, expectations and the strength of the economy, but the standard monetary-policy relationship tested by the CIRE is higher interest rates # weaker demand # reduced inflation pressure .
Study Guide Reference: CIRE Elements 5.1-5.2 - monetary policy, interest rates, inflation, economic cycles and the role of central banks.
NEW QUESTION # 68
A trader expects the price of a stock to rise and wants to use a bullish strategy in options trading.
Which of the following strategies should the trader use?
Answer: B
Explanation:
The correct answer is C . Buying a call option , also known as taking a long-call position, is the fundamental directional options strategy for an investor who expects the underlying security's price to rise. A call gives its holder the right, but not the obligation, to buy the underlying asset at the specified strike price within the applicable exercise period. CIRO's investor materials expressly define a call as the right to buy an asset at a specified price within a specified time.
If the stock price rises sufficiently above the strike price, the call generally becomes more valuable because the holder possesses the right to purchase the shares at the lower contractual price. The buyer's maximum contractual loss is generally limited to the premium paid, while the potential gain increases as the underlying price rises above the strike price and break-even level.
A and D are conventionally bearish positions: selling an uncovered call benefits principally when the price fails to rise materially, while buying a put benefits from declining prices. Selling a put can also represent a bullish strategy , because the writer benefits if the stock stays above the strike price; however, when an examination asks for the basic direct bullish options position associated with an expected price increase, the canonical answer is buying a call .
The CIRE syllabus explicitly requires knowledge of puts and calls and bullish, bearish, neutral and income- producing options strategies .
Study Guide Reference: CIRE Elements 8.1 and 8.6 - puts and calls; bullish derivative strategies.
NEW QUESTION # 69
Which of the following statements best describes the benefit of holding a cumulative preferred share?
Answer: A
Explanation:
The defining benefit of a cumulative preferred share is that dividends omitted during a period in which the issuer does not make the scheduled payment are carried forward as dividends in arrears . Those accumulated unpaid dividends generally must be satisfied before dividends can be paid to common shareholders.
Accordingly, B is the correct answer .
The cumulative feature provides additional dividend protection compared with a non-cumulative preferred share. It does not guarantee that the issuer will always have sufficient resources to pay dividends, but it preserves the preferred shareholder's contractual entitlement to missed declared or scheduled cumulative amounts in accordance with the share terms. Official Canadian securities materials illustrate cumulative preferred shares with entitlement to accrued and unpaid dividends and priority over junior shares concerning dividend payments.
C is incorrect because missed preferred dividends do not normally become an interest-bearing loan; the unpaid dividend amount accumulates, but interest does not automatically accrue unless the specific terms expressly provide otherwise. A is incorrect because cumulative status relates to dividends, not the accumulation of voting rights. D confuses dividend rights with redemption provisions, which are separate contractual features.
The CIRE syllabus expressly requires candidates to understand the types, features, risks and returns of preferred shares within its equity securities curriculum.
Study Guide Reference: CIRE Element 7.2 - Equities: Common Shares and Preferred Shares.
NEW QUESTION # 70
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