An unmanaged fixed income security portfolio handled by an independent trustee is known as a______________.
A. junk bond fund
B. closed-end investment company
C. unit investment trust
D. hedge fund
Answer: Option C
Solution (By Examveda Team)
A unit investment trust (UIT) is a type of investment company that offers a fixed, unmanaged portfolio of securities, typically bonds or other fixed income instruments.Unlike actively managed funds, a UIT is not actively traded or adjusted by a fund manager after its creation; instead, it is held by an independent trustee who maintains the portfolio until maturity.
This makes UITs distinct because they follow a buy-and-hold strategy, ensuring that the original composition of the portfolio remains largely unchanged over time.
Therefore, an unmanaged fixed income security portfolio handled by an independent trustee is best described as a unit investment trust.
This Question Belongs to Commerce >> Financial Management
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*Correct answer: (C) unit investment trust*
*Unit Investment Trust (UIT)* ki 3 khasiyat hoti hain:
1. *Unmanaged* → Ek dafa portfolio bana diya, phir active buying/selling nahi hoti
2. *Fixed income securities* → Zyada tar bonds hoti hain portfolio mein
3. *Independent trustee* → Portfolio ko hold karta hai aur investors ko income deta hai
*Baaki options kyun ghalat:*
- *(A) Junk bond fund* → High-risk bonds ka fund hai, lekin managed bhi ho sakta hai
- *(B) Closed-end investment company* → Ye *managed* hoti hai, fund manager active trading karta hai
- *(D) Hedge fund* → *Highly managed* + aggressive strategies + koi trustee zaroori nahi
*Formula yaad rakho:*
*UIT = Unmanaged + Trustee + Fixed Portfolio + Maturity Date*