Series 7 Exam Question 175: Answer and Explanation

Question: 175

Which of the following would qualify as management companies?

• A. Mutual funds
• B. Unit investment trusts
• C. Closed-end funds
• D. Both A and C

Correct Answer: D

Explanation:

D. Mutual (open-end) and closed-end funds are considered management companies because they have actively managed portfolios and are defined as such according to the Investment Company Act of 1940. Because unit trusts do not have actively managed portfolios, they're not considered management companies and have their own classification.