Canadian Securities Course (CSC) Level 1 Practice Exam

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What does the MFDA IPC protect?

It ensures car safety standards
It protects eligible customers of insolvent MFDA member firms
It offers legal representation to small businesses
It provides cybersecurity services

The correct answer is: It protects eligible customers of insolvent MFDA member firms

The correct answer is B. The MFDA IPC (Investor Protection Corporation) protects eligible customers of insolvent MFDA (Mutual Fund Dealers Association) member firms. In the event that an MFDA member firm becomes insolvent and is unable to return securities and cash to its clients, the MFDA IPC steps in to compensate those clients for their losses, up to certain prescribed limits. This protection helps enhance confidence in the financial markets by providing investors with a safety net in case their investment dealer faces financial difficulties. Options A, C, and D are incorrect as they do not accurately represent the role and function of the MFDA IPC.