Packed Investments

Question 1

Investment Companies

Answer 1

Pool investors money and then invest that money in securities on their behalf. This reduces the overall risk associated with investing in only one or a few.

Question 2

Types of Investment Companies

Answer 2

Face-Amount Certificate (FAC)
Unit Investment Trust (UIT)
Management Investment Companies (MIC)

Question 3

Face Amount Certificates (FACs)

Answer 3

NOT managed. Contract between the issuer and investor. Issuer guarantees payment of face amount sum to the investor at some set date and the investor agrees to pay the issuer a set amount either as a lump sum or in periodic installment.

Question 4

Unit Investment Trusts (UITs)

Answer 4

NOT managed. No BOD. Portfolio of debt or equity securities, sell redeemable interest (units or shares of beneficial interest) in portfolio.

UNIT either fixed or nonfixed.

Question 5

Debt Fixed UIT

Answer 5

purchases a portfolio of bonds and terminates when the bonds in the portfolio matures

Question 6

Equity Fixed UIT

Answer 6

purchases a portfolio of stocks and terminates at a predetermined date.

Question 7

Non-fixed UIT

Answer 7

purchases shares of an underlying mutual fund.

Question 8

Managed Investment Companies

Answer 8

Most familiar. It is either closed end or open end, both sell shares to the public with an initial public offering (IPO)