Series 63 practice questionmediumInvestment Contract Howey Test
Which of the following situations would NOT meet the Howey Test for an investment contract under the USA?
- AA group of investors managing their own real estate purchase✓ Correct answer
- BInvestors purchasing interests in a managed cattle investment
- CInvestors participating in a mutual fund
- DPurchasers of shares in a managed investment pool
Explanation
Why A — A group of investors managing their own real estate purchase
If the investors manage the investment themselves, they fail the 'profits from the efforts of others' prong of the Howey Test. The other scenarios all meet the definition of investment contract.
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