Investment Companies and Packaged Products Flashcards
6 cards from real SIE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Investment Companies and Packaged Products flashcards as text
What is the key difference between open-end and closed-end mutual funds?
Answer: Open-end funds continuously issue new shares; closed-end have a fixed number of shares
Open-end funds (traditional mutual funds) create and redeem shares continuously, while closed-end funds issue a fixed number of shares traded on exchanges.
At what price are open-end mutual fund shares bought and sold?
Answer: At the next calculated Net Asset Value (NAV)
Open-end mutual funds transact at the NAV calculated after the trading day ends (forward pricing rule).
What is a 12b-1 fee?
Answer: An annual fee charged by mutual funds to cover marketing and distribution costs
A 12b-1 fee is an annual fund expense used for marketing and distribution, included in the fund's expense ratio.
Which type of mutual fund share class typically has a front-end sales load?
Answer: Class A shares
Class A shares typically charge a front-end sales load, deducted from the initial investment at the time of purchase.
An Exchange-Traded Fund (ETF) differs from a mutual fund primarily because:
Answer: ETFs trade on exchanges throughout the day like stocks
ETFs trade on exchanges continuously throughout the trading day at market prices, unlike mutual funds priced once at end of day.
Net Asset Value (NAV) per share is calculated as:
Answer: (Total assets minus total liabilities) divided by shares outstanding
NAV per share equals the fund's total assets minus its liabilities, divided by the number of outstanding shares.