Series 7 practice questioneasyPackaged Products — UITs
A unit investment trust (UIT) differs from a mutual fund primarily because a UIT:
- AIs actively managed and frequently trades securities
- BDoes not distribute income to investors
- CCan only invest in government bonds
- DHas a fixed portfolio that is not actively managed✓ Correct answer
Explanation
Why D — Has a fixed portfolio that is not actively managed
A unit investment trust holds a fixed portfolio of securities that is assembled at creation and generally not changed. Unlike mutual funds, UITs do not have an investment adviser actively managing the portfolio. UITs have a stated termination date, at which point the portfolio is liquidated and proceeds are distributed to unit holders.
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