Main Street Capital Corporation (MAIN) is registered as a non-diversified investment company under the Investment Company Act of 1940.Based on this, which of the following statements regarding MAIN are true?
I. MAIN may not invest more than 5% of its investment monies in any single issuer.
II. The net asset value of MAIN's shares is likely to fluctuate more than that of a diversified investment company.
III. MAIN's returns are more likely to be affected by any single, specific economic occurrence or regulatory change.

Question

Quizplus · Accepted Answer

Only Selections II and III are true. Because MAIN is a non-diversified investment company, it may invest more than 5% of its investment monies in a single issuer. This results in less risk diversification, so its net asset value is likely to fluctuate more than that of a diversified investment company. In addition, this means its returns are more likely to be affected by any single, specific economic occurrence or regulatory change.

Main Street Capital Corporation (MAIN) Is Registered as a Non-Diversified