Investment Companies Overview

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Chapters in this video

  1. 0:00 The ICA as Wall Street's building code for pooled investments
  2. 1:52 Three types: the exact-count exam trap
  3. 2:51 UITs have no steering wheel: no board, no adviser
  4. 4:07 Management companies only: open-end versus closed-end
  5. 5:20 The 75-5-10 diversified math test
  6. 7:03 Rapid-fire exam recap

What this video covers

  • The core purpose of the Investment Company Act of 1940 (ICA): protecting investors who pool money for professional management
  • Why the ICA defines exactly three types of investment companies, and how test writers bait you with fake fourth types
  • What a face-amount certificate company is, why it is rare, and why it still matters on the exam
  • Why a unit investment trust (UIT) is not a management company: no board of directors, no investment adviser, pure passive fixed portfolio
  • The two sub-classifications that apply only to management companies: open-end versus closed-end by share structure
  • The net asset value (NAV) pricing for open-end mutual funds versus exchange trading for closed-end shares after initial public offering (IPO)
  • The 75-5-10 diversified test: 75% of assets, no more than 5% in any single issuer, no more than 10% of any issuer's voting securities

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Read the Free Lesson → free · no signup wall