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- Series 26 – Investment Company Products/Variable Contracts Limited Principal Exam
Free Series 26 – Investment Company Products/Variable Contracts Limited Principal Exam Exam Questions and Answers
Last updated: March 29, 2025
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Series 26 – Investment Company Products/Variable Contracts Limited
Principal Exam
#Question
If an investor diversifies by investing in assets across multiple geographic regions, what risk are they trying to mitigate?
A.
Currency risk
B.
Concentration risk
C.
Market volatility
D.
Economic downturns
Correct Answer:
B
Investors seeking geographic diversification aim to mitigate concentration risk by spreading their investments across varied regions.
#Question
What is the significance of a fund having a minimum investment requirement?
A.
Ensures risk assessment
B.
Minimizes management effort
C.
Establishes exclusivity
D.
Discourages small investors
Correct Answer:
D
A minimum investment requirement often discourages smaller investors and ensures that the fund is aligned with more serious or committed investors.
#Question
How does inflation typically impact fixed income investments?
A.
Has no effect
B.
Increase their value
C.
Decrease purchasing power
D.
Stabilize income
Correct Answer:
C
Inflation tends to decrease the purchasing power of fixed income investments, eroding real returns.
#Question
If a client's investment portfolio heavily favors fixed income, what might they be missing?
A.
Adequate diversification
B.
Low fees
C.
Safe investments
D.
Growth opportunities
Correct Answer:
D
An over-reliance on fixed income could prevent the client from benefiting from growth opportunities in stocks or higher-yield investments.
#Question
What do federal laws require of mutual funds when it comes to advertisements?
A.
Minimize risks
B.
Use complex financial jargon
C.
Provide guarantees of returns
D.
Present information about past performance
Correct Answer:
D
Federal laws mandate that mutual fund advertisements include information about past performance to ensure transparency and informed decision-making.
#Question
In a situation where a fund manager leaves unexpectedly, what concern might arise?
A.
Stability of fund management
B.
Increased fees
C.
Guaranteed returns
D.
Lower investment caps
Correct Answer:
A
The sudden departure of a fund manager can create concerns about stability and strategy continuity for investors, potentially impacting fund performance.
#Question
Clients interested in socially responsible investing may prefer which type of fund?
A.
Commodities
B.
Large-cap focus
C.
ESG funds
D.
Cash reserves
Correct Answer:
C
ESG funds focus on environmental, social, and governance factors, catering to investors interested in socially responsible investment opportunities.
Series 26 – Investment Company Products/Variable Contracts Limited Principal Exam
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