Quiz Understanding the Financial Planning Certification Exam Part 1 Lesson 14
Quiz Understanding the Financial Planning Certification Exam Part 1 Lesson 14
Multiple Choice Quiz: Investment Company Act of 1940
1. The Investment Company Act of 1940 primarily regulates which of the following?
A) Commercial banks
B) Investment companies
C) Insurance companies
D) Hedge funds
2. What was the main reason behind the enactment of the Investment Company Act of 1940?
A) Stock market crash of 1929
B) Dot-com bubble burst
C) Great Depression
D) Housing market crash of 2008
3. Which of the following is NOT regulated by the Investment Company Act of 1940?
A) Mutual funds
B) Exchange-traded funds (ETFs)
C) Closed-end investment companies
D) Real estate investment trusts (REITs)
4. Which regulatory act amended the Investment Company Act of 1940 in 2010?
A) Dodd-Frank Wall Street Reform and Consumer Protection Act
B) Sarbanes-Oxley Act
C) Gramm-Leach-Bliley Act
D) Glass-Steagall Act
5. What type of mutual fund calculates its net asset value (NAV) daily?
A) Closed-end mutual fund
B) Open-end mutual fund
C) Hedge fund
D) Venture capital fund
6. Which publication provided historical insights into the Investment Company Act of 1940?
A) The New York Times
B) The Wall Street Journal
C) Washington University Law Review
D) Forbes Magazine
7. What is the main objective of the Investment Company Act of 1940?
A) To maximize investor profits
B) To minimize government intervention
C) To protect investors and ensure market integrity
D) To promote speculative trading
8. Which investment vehicle was prevalent during the 1930s but is now considered obsolete?
A) Real estate investment trusts (REITs)
B) Unit investment trusts (UITs)
C) Face amount certificate companies
D) Mutual funds
9. What did the Investment Company Act of 1940 aim to achieve after the Great Depression?
A) Increase speculative trading
B) Restore investor confidence
C) Promote risky investments
D) Deregulate the financial markets
10. Which investment vehicle is traded like a stock but operates as a mutual fund?
A) Closed-end mutual fund
B) Open-end mutual fund
C) Hedge fund
D) Private equity fund
11. What financial crisis prompted the need for stricter regulations, leading to the Investment Company Act of 1940?
A) The Savings and Loan Crisis
B) The Dot-Com Bubble
C) The Great Depression
D) The Subprime Mortgage Crisis
12. What type of investment trust has a fixed portfolio for a specific period, after which the securities are sold and the money returned to investors?
A) Closed-end mutual fund
B) Open-end mutual fund
C) Unit investment trust
D) Hedge fund
13. Which type of mutual fund typically trades at a slight discount or premium to its net asset value (NAV)?
A) Open-end mutual fund
B) Closed-end mutual fund
C) Exchange-traded fund (ETF)
D) Index fund
14. What document published historical insights into the Investment Company Act of 1940?
A) The Wall Street Journal
B) The New York Times
C) Washington University Law Review
D) Harvard Business Review
15. Which of the following is a primary objective of the Investment Company Act of 1940?
A) To maximize corporate profits
B) To minimize investor returns
C) To protect investors from fraudulent practices
D) To encourage risky investments
16. What type of investment companies are considered obsolete and are no longer prevalent in the investment landscape?
A) Real estate investment trusts (REITs)
B) Mutual funds
C) Hedge funds
D) Face amount certificate companies
17. What was the major focus of the Investment Company Act of 1940 in terms of protecting investors?
A) Disclosing potential investment risks
B) Ensuring high returns on investments
C) Restricting investor access to financial markets
D) Reducing transparency in investment activities
18. Which act amended the Investment Company Act of 1940 to address regulatory concerns post-2008 financial crisis?
A) Dodd-Frank Wall Street Reform and Consumer Protection Act
B) Sarbanes-Oxley Act
C) Gramm-Leach-Bliley Act
D) Volcker Rule
19. Which investment vehicle calculates its net asset value (NAV) based on the total value of its underlying securities?
A) Closed-end mutual fund
B) Hedge fund
C) Index fund
D) Open-end mutual fund
20. What type of investment vehicle is traded on an exchange and can be bought and sold throughout the trading day?
A) Closed-end mutual fund
B) Open-end mutual fund
C) Hedge fund
D) Exchange-traded fund (ETF)
Answer Key:
Answer Key:
1 B) Investment companies
2 C) Great Depression
3 D) Real estate investment trusts (REITs)
4 A) Dodd-Frank Wall Street Reform and Consumer Protection Act
5 B) Open-end mutual fund
6 C) Washington University Law Review
7 C) To protect investors and ensure market integrity
8 C) Face amount certificate companies
9 B) Restore investor confidence
10 A) Closed-end mutual fund
11 C) The Great Depression
12 C) Unit investment trust
13 B) Closed-end mutual fund
14 C) Washington University
15 C) To protect investors from fraudulent practices
16 D) Face amount certificate companies
17 A) Disclosing potential investment risks
18 A) Dodd-Frank Wall Street Reform and Consumer Protection Act
19 D) Open-end mutual fund
20 D) Exchange-traded fund (ETF)
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