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Flashcards in Investment Company Securities Deck (139)
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1

Requires registration of persons who charge fees for providing investment advice

Investment Advisors Act of 1940

2

Defines and regulates investment companies, including mutual funds

Investment Company Act of 1940

3

Three types of Investment Companies defined by the Investment Company Act of 1940

Face Amount Certificate, Unit Investment Trust, Management Company

4

Management company shares that may trade at a price more or less than their net asset value

Closed-ended Investment companies

5

Three types of securities that closed-end companies can issue

Common shares, preferred shares and bonds

6

Type of management company that can issue shares continuously

Open-end

7

Type of management company that issues a fixed number of shares in a single offering

Closed-end

8

Type of management company that can issue only equity shares

Open-end

9

Type of management company that can issue both equity and debt

Closed-end

10

Type of management company shares that are redeemed by the issuer

Open-end

11

Type of management company shares that trade in the secondary market

Closed-end

12

The difference between the Public Offering Price and Net Asset Value

Sales load

13

Type of management company shares that are priced by formula

Open-end

14

Type of management company shares that are priced by supply and demand

Closed-end

15

An investment company which issues redeemable securities and is not actively managed

Unit investment trust

16

The price at which an investor purchases closed-end company shares

Ask price

17

Type of management company that offers shares through a continuous primary offering

Open-end

18

Number of days mutual fund shares must be held before they can be used as collateral in a margin account

30 days

19

The only type of securities that mutual funds can issue

Common shares

20

Securities legislation that defines and regulates investment companies

Investment Company Act of 1940

21

Maximum sales charge for mutual funds permitted by FINRA rules

8.5% of POP

22

Quantity purchase discounts that apply to individuals who purchase funds within the same fund family

Breakpoints

23

Document that allows an investor to receive a discounted sales charge on current and future funds invested within the same fund family

Letter of Intent

24

Maximum duration of a Letter of Intent

13 months

25

The maximum time allowed to backdate a Letter of Intent

90 days

26

Allows for reduction of sales charges on subsequent purchases based on combining additional purchases with prior share appreciation

Rights of accumulation

27

Maximum time limit for Rights of Accumulation

There are no time limits imposed on Rights of Accumulation

28

FINRA violation which involves encouraging a customer to purchase shares at a point below an available sales charge reduction

Breakpoint sale

29

Mutual fund share class with a front end sales load

Class A shares

30

Mutual fund share class with a back-end load and 12b-1 fees

Class B shares