Fundamentals of Indirect Investing

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Multiple Choice Questions Investing Indirectly . Which of the following is not a characteristic of investments companies? pooled investing a. b. diversification c. managed portfolios d. reduced expenses In order to avoid paying income taxes, an investment company must: 2. a. be classified as a non-profit organization b. invest only in municipal bonds. c. pass on interest, dividends, and capital gains to the stockholders. registered as a closed-end investment company. d. be 3.

Investment companies must register with the SEC under the provisions of the: . Securities Act of 1933 b. Securities Exchange Act of 1934 c. Maloney Act of 1938 d. Investment Company Act of 1940 Types of Investment Companies 4. The most popular type of investment company is a: a. unit investment trust. b. mutual fund. c. closed-end investment company d. real estate investment trust. 5. An unmanaged fixed income security portfolio handled by an independent trustee is known as a: a. Junk bond fund b. closed-end investment company. c. unit investment trust. d. hedge fund. 6.

Which of the following is a major objective of unit investment trusts? a. capital preservation b. apital gains c. current income d. tax deferment A major difference between a closed-end investment company and an 7. open-end investment company is that: a. closed-end investment companies are generally much riskier. b. their security portfolios are substantially different. c. closed-end investment companies are passive investments and open-ends are not. d. closed-end companies have a more fixed capitalization. 8.. Which of the following generally trade on stock exchanges? a. unit investment trusts b. losed-end investment companies c. open-end investment companies d. All trade on stock exchanges. 9. Which of the following statements concerning the trend in investment company growth is true? a. The recent trend shows more growth in closed-end investment companies. b. The recent trend shows more growth in unit investment trusts.

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