Products & Their RisksQuestion 73 of 398
A distinguishing feature of a unit investment trust (UIT) is that it:
a.Employs a portfolio manager who actively trades the holdings
b.Charges a contingent deferred sales load on all redemptions
c.Continuously issues new shares at net asset value like an open-end fund
d.Holds a fixed portfolio of securities that is not actively managed and has a set termination date
Explanation
A UIT is an investment company that buys a fixed portfolio of securities and holds it, without active management, until a predetermined termination date. It issues redeemable units representing an undivided interest in the portfolio and has no board of directors or investment adviser making ongoing trading decisions.
Law Reference: Investment Company Act of 1940Practice all 398 questions free — no signup required.
Related questions on this topic
- Which statement correctly distinguishes a closed-end fund from an open-end fund?
- Which of the following is generally TRUE of an exchange-traded fund (ETF)?
- An investor wants to place a limit order and trade intraday, and to be able to use stop orders. Compared with a traditional open-end mutual fund, which product better meets these needs?
- When a unit investment trust reaches its predetermined termination date, what typically happens?
- To qualify for favorable tax treatment as a real estate investment trust (REIT), the entity must distribute to shareholders at least:
- An investor wants exposure to real estate that generates income from mortgage interest rather than from owning and renting property. Which product best fits?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review