SIE Understanding Products and Their Risks Question 83: Answer and Explanation

Question: 83

Which investment generally requires the investor to sign a Subscription Agreement?

• A. Mutual fund
• B. Tenant in Common (TIC) transaction
• C. Hedge fund
• D. Unit Investment Trust (UIT)

Correct Answer: C

Explanation:

C: Choice C is correct because a subscription agreement outlines for investors the process of purchasing ownership in a limited partnership and assures the fund managers that the investor is eligible to participate in the hedge fund. Choices A and D are incorrect because a mutual fund and a Unit Investment Trust (UIT) are registered with the SEC and each provide a prospectus to the investor. Choice B is incorrect because a TIC transaction involves signing a mortgage rather than purchasing ownership in an entity.