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

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When a mutual fund shares are purchased at NAV, what is one of the applicable rules regarding the exchange privilege?

The exchange must occur within 15 days
The exchange must occur within 30 days
The exchange can occur anytime
The exchange must occur within 60 days

The correct answer is: The exchange must occur within 30 days

When mutual fund shares are purchased at the net asset value (NAV), investors have the option to exchange their shares for shares in a different fund managed by the same investment company. This is known as an exchange privilege. The rule regarding this exchange privilege stipulates that the exchange must occur within 30 days of the original purchase. This timeframe helps regulate how soon an investor can transfer their investment between funds, ensuring that exchanges are made in a timely manner and allowing the fund managers to manage their portfolios more effectively. It's crucial for investors to be aware of this rule when considering their options for moving assets between different funds to remain compliant with the mutual fund's policies.