SIE practice questionhardUITs
Which scenario best illustrates the risk associated with a UIT’s fixed portfolio?
- AThe trust cannot adapt to changing market conditions after formation✓ Correct answer
- BTrust managers trade actively to maximize returns
- CInvestors can exit at any time with no market price impact
- DThe trust pays guaranteed annual returns
Explanation
Why A — The trust cannot adapt to changing market conditions after formation
UIT portfolios are fixed and not managed in response to market changes, increasing exposure to sector or security risk. Active management (B), guaranteed returns (D), and unlimited liquidity (C) do not apply.
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