3.3 Mutual Funds, Unit Investment Trusts, and Separately Managed Accounts Flashcards
separately managed account
one advantage of a separately managed account is the ability to maintain an individual cost basis in the securities held in the account.
a separately managed account holds a diversified portfolio of securities managed by a professional money manager
in a separately managed account, the investor owns 100% of the securities in the account.
characteristic of balanced mutual funds
They combine debt and equity securities
Daniel has several investment company products within his retirement portfolio. One of these investments trades on an exchange, may trade at a premium or discount to its net asset value, and has a fixed capital structure. These features illustrate which of these investments?
Closed-end investment company
closed-end funds
Investors in closed-end shares can profit from changes in the discount to NAV.
What kind of investment company has no provision for redemption of outstanding shares
The answer is closed-end company. The closed-end company does not redeem the shares that it issues. The closed-end company has a fixed capitalization and, like regular corporations, outstanding shares trade on the open market
Open-ended funds that invest in stocks in a single industry or theme are called
The answer is sector funds. Sector funds concentrate their stock selections in a single industry or theme
Louis owns an investment that is an unmanaged portfolio in which the money manager initially selects the securities to be included in the portfolio and then holds those securities until they mature or the investment portfolio terminates. This statement best describes which type of investment?
The answer is unit investment trust. A unit investment trust (UIT) is an investment company whose units are sold in the secondary market and is generally unmanaged, or passively managed as the money manager initially selects the securities to be included in the portfolio and then holds those securities until they mature or the UIT terminates.
A fund that invests in both U.S. stocks and international stocks is called
Global Fund
What is a Unit investment trusts
Unit investment trusts are fixed portfolios of securities, most frequently in fixed income that an investor pays a load upfront to own, but have no turnover because it is a fixed portfolio of self-liquidating securities that have no management fee.
Long-term bond funds have
more interest rate risk than short-term bonds.
