Packaged Products: Overview

Question 1

Packaged Products: Overview
INVESTMENT COMPANY DEFINITION
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-General
1) investment company does what
2) what do investment companies offer [3]
3) what investment company “act” regulates the functions of investment companies

• Investment company act of 1940: Face-Amount Certificate Company
  4) around anymore
  5) Investors pay a fixed monthly amount to the investment company in return for what
  6) the difference between investors cost basis and what they receive is what
  7) what are the underlying investments owned

Answer 1

1) collects funds from individuals and purchases securities consistent with the investment company’s objective [i.e., income or capital gains]
2) diversification, selection of investment, ongoing management
3) Investment Company Act of 1940
4) no, virtually obsolete
5) guaranteed rate of return
6) compound interest earned on the investments
7) highest quality obligations such as U.S. Government debt and AAA municipal and corporate debt

Question 2

Packaged Products: Overview
INVESTMENT COMPANY DEFINITION
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-Investment company act of 1940: Management Company
1) organized as what and issues shares of stock
2) who decides what securities to place in the portfolio 2.1) can “manage” the portfolio, buying and selling as long as
3) Management company structures be “open-end” or “closed-end”:?
Open End
4) commonly known as
5) most popular structure?
6) issue only what type of shares
7) the number of common shares issued is what
8) Are shares negotiable
9) are ETFs classified as open
Closed-end
10) one-time issuance of stock?
11) Are shares negotiable
11.1) because of this

Answer 2

1) corporation 2) investment adviser or manager
2. 1) consistent with the fund’s investment objective
3) Yes
4) mutual fund
5) yes
6) common shares
7) unlimited, open
8) no
9) Yes
10) yes
11) yes
11. 1) are publicly traded funds on exchange, traded at market price, not redeemable

Question 3

Packaged Products: Overview
INVESTMENT COMPANY DEFINITION
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-Investment company act of 1940: Unit Investment Trust
1) T/f: organized under a “trust indenture” rather than being set up as a corporation.
2) investors get shares?
3) the two types of UITs are?

Fixed UIT

4. 1) The trust selects a portfolio of what
5. 2) Once the portfolio is selected, does the portfolio change [managed: buy and sell]
6. 3) once portfolio is created, the trust sells what to investors
7. 4) As interest payments are made on the bonds, who gets it
8. 5) When all the bonds have matured what happens

Participating UIT

5. 1) Instead of the trust selecting individual securities, the trust invests in what
6. 2) purchasers of participating trusts are indirectly buying what
7. 3) are they used in variable annuity contracts
8. 31) those that invest in a variable annuity, can do what at retirement

Answer 3

1) True
2) no, shares of beneficial interest
3) fixed UIT & Participating UIT

4. 1) securities (usually bonds)
5. 2) no
6. 3) units
7. 4) investors
8. 5) trust self-liquidates

5) shares of a management company - specifically mutual fund shares.
5. 2) mutual fund shares
5. 3) yes
5. 3.1) investor can “cash-out” of the investment either as a lump sum payment, in periodic payments, or in the form of an annuity