DFA 2002 CASE STUDY CERTIFICATION
SCRIPT 2026 QUESTIONS WITH ANSWERS
GRADED A+
⩥ What type of security do investment companies provide to investors?
Answer: Investment company securities provide diversification to an
investor.
⩥ What is the most common type of investment company? Answer:
Mutual fund.
⩥ Under which act must investment companies register with the SEC?
Answer: The Investment Company Act of 1940.
⩥ What are the three types of investment companies defined by the
Investment Company Act of 1940? Answer: Face-amount certificate
company, management company, and unit investment trust.
⩥ What is a management company? Answer: A company that pools
money from investors to create a portfolio of securities (a fund).
⩥ What is the difference between open-end and closed-end management
companies? Answer: Open-end companies can issue unlimited common
,shares, while closed-end companies have a one-time issuance of stock
and trade like other negotiable securities.
⩥ How do investors redeem shares in an open-end management
company? Answer: Investors sell their shares back to the fund, which
redeems them.
⩥ What characterizes a closed-end fund? Answer: It is not redeemable
and trades like any other negotiable securities on an exchange.
⩥ What is a Unit Investment Trust (UIT)? Answer: A trust that issues
shares of beneficial interest representing an undivided interest in a unit
of the trust's portfolio.
⩥ What are the two types of UITs? Answer: Fixed trusts and non-fixed
trusts.
⩥ What is the key feature of fixed trusts? Answer: They select a
portfolio of securities that is not changed after selection, with no
management fees.
⩥ What do non-fixed trusts invest in? Answer: They invest in mutual
fund shares and are often used with insurance products.
, ⩥ What is a variable annuity? Answer: A retirement planning product
that uses investment companies to provide investment options.
⩥ Who is responsible for overseeing the management of an investment
company? Answer: The Board of Directors (BOD).
⩥ What percentage of the Board of Directors must be non-interested
persons according to the Investment Act of 1940? Answer: 40%.
⩥ What is the role of the fund sponsor? Answer: To establish the fund
and register it with the SEC before shares can be sold.
⩥ What is the function of a fund distributor? Answer: To sell shares to
the public, often hired by the fund sponsor.
⩥ What is the purpose of the selling group in an investment company?
Answer: To help sell the fund and act as agents for the sponsor.
⩥ What is the primary responsibility of the investment adviser? Answer:
To manage the fund and choose which securities will be bought and
sold.
⩥ What is the largest expense of a mutual fund? Answer: The
management fee paid to the investment adviser.
SCRIPT 2026 QUESTIONS WITH ANSWERS
GRADED A+
⩥ What type of security do investment companies provide to investors?
Answer: Investment company securities provide diversification to an
investor.
⩥ What is the most common type of investment company? Answer:
Mutual fund.
⩥ Under which act must investment companies register with the SEC?
Answer: The Investment Company Act of 1940.
⩥ What are the three types of investment companies defined by the
Investment Company Act of 1940? Answer: Face-amount certificate
company, management company, and unit investment trust.
⩥ What is a management company? Answer: A company that pools
money from investors to create a portfolio of securities (a fund).
⩥ What is the difference between open-end and closed-end management
companies? Answer: Open-end companies can issue unlimited common
,shares, while closed-end companies have a one-time issuance of stock
and trade like other negotiable securities.
⩥ How do investors redeem shares in an open-end management
company? Answer: Investors sell their shares back to the fund, which
redeems them.
⩥ What characterizes a closed-end fund? Answer: It is not redeemable
and trades like any other negotiable securities on an exchange.
⩥ What is a Unit Investment Trust (UIT)? Answer: A trust that issues
shares of beneficial interest representing an undivided interest in a unit
of the trust's portfolio.
⩥ What are the two types of UITs? Answer: Fixed trusts and non-fixed
trusts.
⩥ What is the key feature of fixed trusts? Answer: They select a
portfolio of securities that is not changed after selection, with no
management fees.
⩥ What do non-fixed trusts invest in? Answer: They invest in mutual
fund shares and are often used with insurance products.
, ⩥ What is a variable annuity? Answer: A retirement planning product
that uses investment companies to provide investment options.
⩥ Who is responsible for overseeing the management of an investment
company? Answer: The Board of Directors (BOD).
⩥ What percentage of the Board of Directors must be non-interested
persons according to the Investment Act of 1940? Answer: 40%.
⩥ What is the role of the fund sponsor? Answer: To establish the fund
and register it with the SEC before shares can be sold.
⩥ What is the function of a fund distributor? Answer: To sell shares to
the public, often hired by the fund sponsor.
⩥ What is the purpose of the selling group in an investment company?
Answer: To help sell the fund and act as agents for the sponsor.
⩥ What is the primary responsibility of the investment adviser? Answer:
To manage the fund and choose which securities will be bought and
sold.
⩥ What is the largest expense of a mutual fund? Answer: The
management fee paid to the investment adviser.
