Practice Quiz

FINRA Series 6

Category - Series 6

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Main Street Capital Corporation (MAIN) is registered as a non-diversified investment company under the Investment Company Act of 1940.Based on this, which of the following statements regarding MAIN are true?

I. MAIN may not invest more than 5% of its investment monies in any single issuer.
II. The net asset value of MAIN’s shares is likely to fluctuate more than that of a diversified investment company.
III. MAIN’s returns are more likely to be affected by any single, specific economic occurrence or regulatory change.
  1. I only
  2. I and II only
  3. II and III only
  4. I, II, and III
Explanation
Answer: C - Only Selections II and III are true. Because MAIN is a non-diversified investment company, it may invest more than 5% of its investment monies in a single issuer. This results in less risk diversification, so its net asset value is likely to fluctuate more than that of a diversified investment company. In addition, this means its returns are more likely to be affected by any single, specific economic occurrence or regulatory change.
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