Question

A customer redeems 1,000 shares of ABC Fund on Wednesday, June 14th. Under the provisions of the Investment Company Act of 1940, the customer must be paid the money no later than:

Answer 1

Wednesday, June 21st

Step-by-step explanation:

In this scenario, since the customer redeemed the shares on Wednesday, June 14th then he must be paid before Wednesday, June 21st. This is 7 days after the redemption. According to section 22 article (e) of the Investment Company Act of 1940, all companies are prevented from postponing the date of payment for more than seven days as stated below.

(e) No registered investment company shall suspend the right

of redemption, or postpone the date of payment or satisfaction upon

redemption of any redeemable security in accordance with its terms

for more than seven days after the tender of such security to the

company or its agent designated for that purpose for redemption