Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Investment Company and Variable Contracts Products Principals Exam. Utilize flashcards and multiple-choice questions with detailed explanations. Excel in your Series 26 Exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

For mutual funds to be used as collateral in a margin account, they must be held fully paid for a minimum of how many days?

10 days
30 days
60 days
90 days

The correct answer is: 30 days

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.