Chapter 4 Mutual Funds and other Investment Vehicles financial intermediaries that invest the funds of individuals I Investment Companies investors in securities or other assets a Functions they perform i Record keeping ii Diversification and responsibility iii Professional management iv Lower transaction costs Liabilities Shares outstanding NAV i Quoted as xx per share II Types of Investment Companies a Unit Investment Trusts in a portfolio fixed for the life of the fund b Net Asset Value NAV Market value of assets Market Value of Money pulled from many investors that is invested i Unmanaged portfolios ii Composition is fixed b Managed Investment Companies i Open End Fund value back to the fund 2 Sold at NAV a fund that issues or redeems its shares at net asset 1 when investors want to sell securities back the sell them ii Closed End Fund traded at prices that can differ from net asset value shares cannot be redeemed but instead are 1 sell shares to other investors 2 traded on exchange can differ from NAV c Other Investmetn Organizations i Commingland Fund 1 Similar to a close end fund 2 for investors with enough money to pool together with other investors to purchase assets not big enough to be an endowment 3 REITS 4 Hedge Funds III Mutual Funds Common name for a Open End Investment a Investment Policies b Money Market Funds i Follow particular asset allocation models i Short term cash like assets ii Share price fixed at 1 Share c Equity Funds i Specialize in holding equity instruments ii Types 1 2 Growth funds focused on gains Income shares of high dividend stock d Specialized sector funds i Focus on a specific sector e Bond Funds i Focus on debt investments International Funds f g Balanced Funds i Hold both stocks and equitites h Asset Allocation and Flexible Funds i Index Funds IV Costs of Investing in Mutual Funds a Fee Structure i Opertating Expenses 1 a percentage deducted directly from market value to pay for management of funds ii Front End Load comission or sales charge when u purchase stock iii Back End Load a redemption or exit fee incurred when u sell product iv 12b 1 Charges fees charged to help promote and market fund
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