Unit 3: Pooled Investments

A mutual fund must redeem its tendered shares within how many days after receiving a request for their redemption?

7

If an investment company invests in a fixed portfolio of municipal or corporate bonds, it is classified as A) UIT B) growth fund C) utilities fund D) closed-end company

A) UIT * key word fixed... UITs cant change portfolio

A client wishing to invest $10,000 in a tax-exempt unit investment trust would be acquiring A) participating interest B) units C) shares D) bonds

B) units

A MF's sales charge is based on NAV or public offering price (POP)?

Based on POP

An investor is studying the prospectus received from the Abundant Returns Asset Allocation Fund. In a section titled "Tenure," the discussion would be dealing with A) the average period of time the investors remain in the fund. B) the length of time that the fund has been in operation. C) the number of years the portfolio manager has been managing the fund. D) the length of time that asset allocations are maintained before changes are made.

C) the number of years the portfolio manager has been managing the fund. *Tenure always refers to management tenure, the length of time the portfolio manager has been at the helm of the fund.

Open or closed-end funds' prices are determined from supply and demand, therefor independent of the fnud's NAV

Closed-end funds

back-end load mutual fund

Mutual funds that charge a fee if shares are redeemed within a set period of time

Private Liquidity Fund

any private fund that seeks to generate income by investing in a portfolio of short-term obligations to maintain a stable net asset value (NAV) per unit or minimize private volatility for investors

One reason that a private equity fund may operate under the Section 3(c)(7) exemption of the Investment Company Act of 1940 is that A) investors would only need to be accredited rather than qualified. B) it would be able to have more than 100 investors. C) greater liquidity would be assured. D) the compensation grid to the manager of a 3(c)(7) fund is higher than to a 3(c)(1) fund.

B) it would be able to have more than 100 investors. *Private equity funds operate under two exemptions found in the Investment Company Act of 1940. The 3(c)(1) exemption limits the number of investors to 100, while no such limit applies to the 3(c)(7) exemption. Under the 3(c)(7) exemption, all investors must be qualified, which is a significantly higher standard than being accredited.

Open end invmt companies (mututal funds) may not purchase any security on margin, sell any security short, or both

both

An investor is always purchasing newly issued shares of CS when investing in: A) a closed-end invmt company B) an open-end invmt company (mutual funds) C) a UIT D) a holding company

B) an open-end invmt company (mutual funds)

which of the following statements correctly expresses requirements under the Investment Company Act of 1940: 1: a registered open-end invmt company using a bank as custodian must choose one w FDIC coverage 2: If an affiliated person of a registered invmt company wishes to borrow money from the fund, there must be 300% asset coverage 3: no invmt advisory contract may be entered into that does not provide for terination with no more than 60 days notice in writitng 4: no registered invmt company may acquire more than 3% of the shares of another invmt company A: I and II B: I and IV C: II and III D: III and IV

D: III and IV

front-end load

Fees paid to the mutual fund company as an entry requirement into certain mutual funds.