Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Series 26 Exam with our comprehensive flashcards and quizzes. Each question includes detailed explanations to guide your study. Master the Investment Company and Variable Contracts Products Principals exam with confidence!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

If an investor initiates a contract redemption, how soon must the payment be sent out by the mutual fund?

3 business days
5 business days
7 business days
10 business days

The correct answer is: 7 business days

When an investor redeems shares in a mutual fund, the mutual fund is required to process the redemption and send out the payment within a specific time frame established by regulations. The correct answer states that the payment must be sent out within 7 business days from the receipt of the redemption request. This requirement is designed to protect investors by ensuring they receive their funds in a timely manner, allowing for liquidity in their investment. Mutual funds must adhere to this standard, providing efficiency and transparency in the redemption process. While it's important for investors to receive payments promptly, the 7-business-day timeframe reflects a balance between operational logistics for the fund and the needs of the investors. The alternatives of 3, 5, or 10 business days do not align with current regulatory requirements governing mutual fund operations.