Canadian Securities Course (CSC) Level 1 Practice Exam

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What are the functions of the MFDA?

  1. Membership approval and penalty application

  2. Conducting market research

  3. Audit, enforce rules, and apply penalties

  4. Public relations and promotions

The correct answer is: Audit, enforce rules, and apply penalties

The Mutual Fund Dealers Association (MFDA) plays a vital role in regulating the mutual fund industry in Canada. Its primary functions include overseeing the activities of its member firms and ensuring compliance with relevant regulations. One of the key responsibilities involves auditing member firms to ensure adherence to established rules and standards. Additionally, the MFDA has the authority to enforce these rules and impose penalties when violations occur. This helps protect investors and maintain the integrity of the financial markets. The function of applying penalties is crucial for deterring misconduct and promoting a culture of compliance among the members. While other functions mentioned, like market research or public relations, may support the overall industry, they are not core responsibilities of the MFDA. The focus of the MFDA firmly lies in regulatory oversight, compliance enforcement, and maintaining industry standards, making the choice regarding audit, enforcement, and penalty application the correct response.

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