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

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What is the maximum duration of time that an investor has to consider previous investments when using a Letter of Intent (LOI)?

60 days
75 days
90 days
120 days

The correct answer is: 90 days

The maximum duration of time that an investor has to consider previous investments when using a Letter of Intent (LOI) is 90 days. This period allows investors to accumulate the necessary investment amount to qualify for benefits or reduced fees associated with the LOI. The LOI is typically used in contexts where a mutual fund or similar investment vehicle offers a breakpoint discount for larger investments. The 90-day timeframe provides a reasonable balance for investors to make additional contributions and ensures that the investments are made within a manageable time frame, reflecting a commitment to the investment strategy. This period is significant as it helps maintain clarity in transactions and record-keeping for both the investor and the financial institution involved. In contrast, shorter durations might limit investor flexibility, while longer durations could complicate the management of investment accounts and breakpoints.