Which type of UIT issues a fixed number of units during their IPO?

The correct choice is that both types of Unit Investment Trusts (UITs), which include both equity and bond UITs, issue a fixed number of units during their initial public offering (IPO). UITs are unique investment vehicles that are established with a specific portfolio of securities for a predetermined investment period, after which the trust is dissolved.

Both equity UITs, which invest primarily in stocks, and bond UITs, which focus on fixed-income securities, have the characteristic of offering a fixed number of units at their inception. This structure allows investors to purchase units in the trust, thereby owning a share of the underlying portfolio. The trust does not buy or sell securities after the initial setup, maintaining the fixed number of units issued.

Thus, this characteristic applies equally to both types of UITs, making option C the accurate answer. Understanding this concept is essential as it helps illustrate how UITs function compared to other investment vehicles that may have a more fluid number of shares or units.