Series 7 practice questionmediumPackaged Products — UITs
Which of the following is TRUE about unit investment trusts?
- AThey have a board of directors that oversees operations
- BThey charge annual management fees similar to mutual funds
- CThey can increase the number of units at any time like open-end funds
- DThey issue redeemable units and have a stated maturity date✓ Correct answer
Explanation
Why D — They issue redeemable units and have a stated maturity date
UITs issue a fixed number of redeemable units and have a stated maturity date when the trust terminates. Unlike mutual funds, UITs do not have a board of directors or an investment adviser actively managing the portfolio. Investors can redeem units at NAV with the trustee, and the trust charges a sales load at purchase but typically has lower ongoing expenses than mutual funds.
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