SIE (Securities Industry Essentials) Practice Exam

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What is a significant difference between an open-end investment management company and a unit investment trust?

Open-end companies have a fixed portfolio
UITs allow unlimited investment amounts
UITs have a fixed portfolio
Open-end companies offer guaranteed returns

The correct answer is: UITs have a fixed portfolio

The significant difference between open-end investment management companies and unit investment trusts (UITs) is that UITs have a fixed portfolio, while open-end companies do not. UITs generally have a fixed number of shares, and therefore a fixed portfolio, while open-end companies can continuously issue and redeem new shares, allowing for a more flexible portfolio. Additionally, UITs usually have a specific end date and do not allow for additional investment amounts, while open-end companies allow for unlimited investment amounts and have no specified end date. While some UITs may offer guaranteed returns, this is not a characteristic that applies to all UITs and is not a defining feature of the investment vehicle.