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Question (Relevant to the Series 6, Series 7, Series 24, Series 26, and Series 65):
According to the Investment Company Act of 1940, for 75% of its assets, a diversified mutual fund will have:
Answers:
A. No more than 5% of its assets in any one company, and will own no more than 5% of any company’s outstanding shares
B. No more than 5% of its assets in any one company, and will own no more than 10% of any company’s outstanding shares
C. No more than 10% of its assets in any one company, and will own no more than 5% of any company’s outstanding shares
D. No more than 10% of its assets in any one company, and will own no more than 10% of any company’s outstanding shares
Correct Answer: B. No more than 5% of its assets in any one company, and will own no more than 10% of any company’s outstanding shares
Rationale: According to the Investment Company Act of 1940, for 75% of its assets, a diversified mutual fund will have no more than 5% of its assets in any one company, and will own no more than 10% of any company’s outstanding shares.
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