Investment company and variable contracts products vocabulary tested on the Series 6 exam.
40 cards · basic cards · AI-written, checked twice. Edit anything.
- What are the three types of investment companies defined by the Investment Company Act of 1940?
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Face-amount certificate companies, unit investment trusts, and management companies.- What is a unit investment trust (UIT)?
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An investment company holding a fixed, unmanaged portfolio that issues redeemable units.- What distinguishes an open-end fund from a closed-end fund?
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An open-end fund continuously issues and redeems shares at NAV; a closed-end fund has a fixed number of shares that trade on an exchange.- How is a mutual fund's net asset value (NAV) per share calculated?
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Total assets minus liabilities, divided by shares outstanding.- What pricing rule requires mutual fund orders to be executed at the next computed NAV?
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Forward pricing.- What is the maximum sales charge FINRA allows on a mutual fund under normal circumstances?
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8.5% of the offering price.- What is a front-end load?
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A sales charge deducted from the purchase amount when fund shares are bought.- What is a back-end load (contingent deferred sales charge)?
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A sales charge applied when shares are redeemed, typically declining the longer they are held.- What is a 12b-1 fee?
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An annual fee deducted from fund assets to pay for marketing and distribution costs.- What is a breakpoint in mutual fund sales charges?
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A dollar investment threshold at which the sales charge percentage is reduced.- What is a Letter of Intent (LOI) in mutual fund investing?
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A statement letting an investor qualify for a breakpoint by committing to invest a set amount within 13 months.- What is Rights of Accumulation?
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A privilege that lets an investor combine the value of prior fund purchases with a new one to qualify for a breakpoint.- What is an expense ratio?
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A fund's annual operating expenses expressed as a percentage of average net assets.- What is dollar cost averaging?
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Investing a fixed dollar amount at regular intervals regardless of the share price.- What is a no-load fund?
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A mutual fund sold without a sales charge.
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