Lecture 12 - Mutual Funds Definition An investment vehicle...

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Mutual Funds Definition An investment vehicle that pools money from many different investors and reinvests that money in a portfolio of securities (for example: bonds, stocks, real estate, mortgages) One of the most popular forms of investment among small investors
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Characteristics of Mutual Funds Open ended Mutual funds are said to be open ended investments because they continuously sell new shares in the fund (called units) to the investing public Right of Redemption Investors have the right to sell their shares back to the fund at any time, and will receive the current unit value upon redemption
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Determining the Share (Unit) Price of a Mutual Fund The current market value of one share (unit) in a mutual fund is determined by the following formula: Share value = CMV of All Assets Held by Fund – Liabilities # shares in fund Called the Net Asset Value Per Share (NAVP)
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Therefore, the value of a fund’s shares or units is NOT determined by the laws of
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Lecture 12 - Mutual Funds Definition An investment vehicle...

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