ch23 - FIN 3303 Chapter 23 Mutual Funds What is a mutual...

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FIN 3303 Chapter 23 Mutual Funds What is a mutual fund? Pools the funds of investors to invest on their behalf. Major advantage of a mutual fund? Diversification Distinguish between closed-end and open-end mutual funds Open-end: -Open to investment at any time -Allow redemption of shares at any time -Have a changing number of shares -Maintain some cash in case redemptions exceed money coming into fund -Consist of many different categories (i.e. equity, fixed income, money mkt) Closed-end: -Do not repurchases shares they sell -Require investors to sell shares on an exchange - Have a constant number of outstanding shares -Are 1/40 th of the asset size of open-end funds -Focus primarily on bonds and other debt securities Load versus no-load mutual funds Front-end load : pay when enter fund Bank-end load : pay when exit fund No-load : promoted by mutual fund; good for investors who can make their own decisions What are ETFs? Exchange Traded Funds.
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ch23 - FIN 3303 Chapter 23 Mutual Funds What is a mutual...

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