Chapter 4 Flashcards
Unit Investment Trust
Investment company organized under a trust indenture; portfolio designed to meet company objectives and then redeemable interests are sold
Face-Amount Certificate
Contract where issuer guarantees payment of a stated sum to an investor at some set date in the future
Closed-end Investment Company
Raises capital by conducting a common stock offering;limited number of shares available
Open-end Investment Company
Only issues one class of security on a continuous basis based on NAV
Characteristics of Class A Shares (2)
Sales charge taken at the time an investor buys the shares; breakpoint schedule
Characteristics of Class B Shares
Sales charge taken when previously bought securities are sold; higher fees
Characteristics of Class C Shares
High annual charges; best for short-term investment horizons
Combination Priviledge
Separate investments in two or more funds may be combined to reach a breakpoint
Exchange Priviledge
Allow an investor to convert an investment in one fund for an equal investment in another fund in the same family
Expense Ratio
Compares management fees and operating expenses with the fund’s net assets
Pipeline Tax Theory
Triple taxation can be avoided if mutual fund acts as a conduit for the distribution of net investment income
Can annuitizing an annuity be reversed
No
Purpose of a variable annuity
Supplemental retirement savings
What Cause Changes In Net Asset Value
Declines or increases in fund value itself or dividend issues
Separate variable annuity account directly managed by insurance company must be registered as..
An open-end management investment company
True about an open-end company, but not a closed-end one
Open-end may sell fractional shares
Who sets record date of a mutual fund
Company
Elements of Expense Ratio
Manager’s fee, admin costs, BOD’s costs, 12b-1 fees
When Statement of Additional Information Request Must Be Satisfied
3 business days
When Ex-Dividend Date Is For A Mutual Fund
Day after record date
What Earmarking Means
Designating
Date That Is Not Set By BoD
Ex-Dividend Date
Fees That No-Load Shares Charge
Anything not considered a sales charge
Where Return on Variable Annuity Comes From
Selected subaccounts within a separate account
