- CFA Exams
- CFA Level I Exam
- Study Session 12. Equity Investments (1)
- Reading 36. Market Organization and Structure
- Subject 2. Assets and Contracts
CFA Practice Question
Which of the following statements regarding investment companies is FALSE?
A. Investment companies invest exclusively in long-term instruments such as stocks, bonds and real estate.
B. Investors who purchase shares from an investment company become owners of the investment company.
C. Investment companies provide a means of acquiring international securities.
Explanation: Investment companies are also heavily involved with money market securities. Money market mutual funds are widely popular and consist of investments in short-term securities.
User Contributed Comments 2
| User | Comment |
|---|---|
| renataa | B. does not sound right to me... Isnt the investment company an intermediary btw investor and the asset/purchased stock...? |
| sevywonder | @renataa yeah, in a sense, but the fractional ownership aspect is critical to ICs' function |