SIE Exam Question 401: Answer and Explanation

Question: 401

Among the most significant differences between an open-end investment management company and a unit investment trust is that:

• A. the open-end company has a net asset value and a UIT does not.
• B. the open-end company issues redeemable securities and the UIT does not.
• C. the UIT has a fixed portfolio and the open-end company does not.
• D. they require different FINRA licenses for an agent to sell them.

Correct Answer: C

Explanation:

C: A unit investment trust typically has a fixed portfolio of securities, whereas an open end (mutual fund) makes purchases of additional securities for the portfolio on a regular and frequent basis.