Investment Companies Flashcards
1
Q
UTI- unit investment trust
A
Fixed portfolio of securities
Units are referred to as shares of beneficial interest
Redeemable with issuer
Not actively managed
Predetermined end date
2
Q
Open- end fund ( mutual fund)
A
Shares are issued and redeemed continuously at POP
Shares do not trade
Shares must be sold with prospectus
POP IS THE NAV + sales charge
3
Q
Closed end Fund
A
Issued shares once and then closes
Not continuous
Shares trade on exchange OTC
Public traded fund
Usually used to hold illiquid securities
4
Q
Mutual fund prohibited activities
A
- Buying/ selling on margin ( buying securities with borrowed funds)
- Short selling
- Selling an uncovered (naked) option contract
5
Q
12b-1 asset distribution fees
A
Paid out by the fund to cover distribution and shareholder device expenses
- covers marketing, advertisement, other distributing fund shares
- Ads include printing and mailing prospectus and sales literature to new investors
- charges QUARTERLY as expense
- can not exceed 0.75% of funds average net asset
- must be approved by majority vote of:
BOD, disinterested members, and of outstanding shares
