Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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What is the SEC-mandated period for advertising the yield of a bond fund?

1 year
5 years
1, 5, and 10 years
30 days

The correct answer is: 1, 5, and 10 years

The correct answer is grounded in the regulatory requirements set by the SEC for bond fund advertising. Specifically, when promoting a bond fund's yield, the SEC mandates that the advertising must include performance data for multiple time frames: 1 year, 5 years, and 10 years. This guideline is designed to provide potential investors with a comprehensive view of the fund's historical performance over both short and longer durations, facilitating better-informed investment decisions. Including yield performance data for these specific time frames helps potential investors understand how the bond fund has performed across various market conditions. The one-year data point offers insight into recent performance, while the five-year and ten-year figures allow investors to gauge the fund's consistency and reliability over a longer horizon. This holistic approach aligns with the SEC's objective of promoting transparency and fairness in the advertising of investment products.