#1
What is the primary function of an investment company?
To manage investment portfolios on behalf of investors
ExplanationInvestment companies primarily manage portfolios for investors.
#2
Which of the following is a characteristic of closed-end investment companies?
They issue a fixed number of shares that trade on exchanges
ExplanationClosed-end companies issue a set number of shares traded on exchanges.
#3
What is the difference between a load fund and a no-load fund?
Load funds charge a fee when shares are bought or sold, while no-load funds do not charge such fees
ExplanationLoad funds charge fees for buying/selling; no-load funds do not.
#4
Which regulatory body oversees the operations of mutual funds in the United States?
Securities and Exchange Commission (SEC)
ExplanationThe SEC regulates mutual fund operations in the US.
#5
What is the role of a custodian bank in the operations of an investment company?
To safeguard the assets of the investment company
ExplanationCustodian banks safeguard investment company assets.
#6
Which of the following statements best describes an exchange-traded fund (ETF)?
An investment vehicle that trades throughout the day on stock exchanges like a stock
ExplanationETFs trade on exchanges throughout the day, like stocks.
#7
What is the primary purpose of an investment adviser in the context of an investment company?
To provide investment advice and manage the investment portfolio
ExplanationAdvisers offer advice and manage investment portfolios.
#8
Which of the following is NOT a type of investment company?
Hedge fund
ExplanationHedge funds are not a type of investment company.
#9
What is the purpose of a 12b-1 fee in mutual funds?
To cover the costs of administrative services provided to shareholders
Explanation12b-1 fees cover administrative services for shareholders.
#10
What is the main difference between an open-end fund and a closed-end fund?
Open-end funds can issue an unlimited number of shares, while closed-end funds issue a fixed number of shares
ExplanationOpen-end funds issue unlimited shares; closed-end funds issue fixed shares.