alleryStart learning →Which of these is one of the three basic types of investment company?
AA unit investment trust that issues fixed units
BA hedge fund open to sophisticated investors
CAn exchange-traded note issued by a bank
DA money market deposit account at a bank
Answer & Solution
Correct answer: A. A unit investment trust that issues fixed units
1. The three basic types of investment company are open-end funds, closed-end funds and unit investment trusts.
2. Mutual funds and most ETFs are open-end funds, while some ETFs are structured as unit investment trusts.
3. A hedge fund is a private, unregistered pool and is not one of the three.
4. An exchange-traded note is a debt obligation of a financial institution, not an investment company.
5. A money market deposit account is a bank deposit and belongs to banking, not to fund structure.
_Source: US SEC Office of Investor Education and Advocacy, "Mutual Funds and ETFs: A Guide for Investors", section Types of Investment Companies_
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