Which of the following statements regarding unit investment trusts (UITs)is (are)true?
A)Managers of UITs are able to invest in assets that are less liquid than managers of closed-end funds can.
B)UITs are required to have a fixed termination date.
C)UITs are better known as mutual funds.
D)Shares of UITs trade only on exchange floors and are not redeemed through the trust itself.

Question

Quizplus · Accepted Answer

Unit investment trusts are required to have a fixed termination date, unlike other investment funds such as open-end mutual funds or closed-end funds. This means that the trust will automatically liquidate and distribute its assets to investors on the termination date. Choices A, C, and D are all incorrect. UITs are required to have a fixed termination date, which means that the trust will terminate at a specified time and the underlying assets will be sold and proceeds distributed to the investors. The other statements are false – managers of UITs do not have more flexibility with less liquid assets, UITs are not known as mutual funds, and shares of UITs can be redeemed through the trust itself.

Which of the Following Statements Regarding Unit Investment Trusts (UITs)is