Investment Company and Variable Contracts Products Principals (Series 26) Practice Exam 2025 – All-in-One Guide to Master Your Exam!

Mutual funds must be held fully paid for a minimum of 30 days before they can be used as collateral in a margin account. This requirement is put in place to ensure that the mutual fund shares have established a history of stability and valuation. By holding the mutual fund shares for this period, there is a decreased risk associated with their volatility, which is important for a secured loan against the margin account. This 30-day rule helps protect both the broker and the investor by mitigating the risks of using an asset that may have fluctuated significantly in value shortly after purchase.