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Terms in this set (20)
A financial intermediate that collect funds from individual investors and invests those funds in a potentially wide range of securities or other assets.
Net Asset Value
(Market Value of Assets-Liability)/(Total Shares)
Unit Investment Trust
An investment company that is unmanaged in the sense that the composition of its portfolio is unchanged. Typically invests in uniform assets such asmnicipal bonds.
An investment company that is managed, such that the composition of its portfolio changes. New shares can be issues or redeemed.
An investment company that is manged, such that the composition of its portfolio changes. A share of the portfolio is traded like a security and cannot be redeemed to the fund.
A mutual fund fee that incorporates
-A mutual fund on steroids, more private, wealthier investors, lock-ups, much riskier investment strategies with leverage.
Reoccuring fees in a mutual fund that are used for marketing purposes.
The ratio of the trading acrivity of a protfolio to theasset of the porfolio
Offshoots of mutual funds that allow investors to trade index portfolios just as they do shares of stock.
What is the key idea of investment companies?
Pooling of assets
What are the four main function investment companies perform for investors?
1.Record keeping and administration
2.Diversification and divisibility
4.Lower transaction costs
How are shares of a unit trust cashed out?
The investors sells the share back to the trustee at the NAV
How do investors in an open fund cash out their shares?
They sell them back to the investment company at NAV
How od investors in close-end fund cash out their shares?
They can only sell them to other investors.
In an open-ended fund can the share ever be below the NAV?
NO it cannot
When would the price of share in an open-end fund be selling above the NAV?
If the share is carrying a load.
What are the four types of fees in mutual funds?
1. Front-End Load
3. 12b-1 Charges
What are some benefits ETFs posses over Mutual Funds?
-traded like a stock
-traded continuously throughout the day.
-can be sold or purchased at a margin
-have the potential to offer tax advantages
-ETFs can be cheaper
What are some disadvantages of ETFS?
-They are purchased from a broker who charges fees
-ETFS prices can depart from the NAV because they are traded like a premium
-ETFs may be susceptible to flash crashes\
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 2 Asset Classes and Financial Instruments
Risk, Return and the Historical Record
How Securities Are Traded
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