4.3 Mutual Funds - Click to edit Master subtitle style 2010...

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Unformatted text preview: Click to edit Master subtitle style 2010 - 2222 H Toprac We must, indeed, all hang together or, most assuredly, we shall all hang separately. Benjamin Franklin Click to edit Master subtitle style 2010 - 2222 H Toprac Foundations of Finance 4.3 Mutual Funds 2010 - 2222 H Toprac Assume you have $1,000 to invest You buy stock of companies youre familiar with, and create the following portfolio: Ebay 5 shares @ $65 each = $325 Anheuser Busch 5 shares @ $45 each = 225 Target 5 shares @ $40 each = 200 Dell 5 shares @ $30 each = 150 McDonalds 5 shares @ $20 each= 100 Total Portfolio $1,000 2010 - 2222 H Toprac 3 So you want to buy stocks 2010 - 2222 H Toprac Perhaps you want to diversify your stock holdings Perhaps youd like a professional to pick the stocks for you (and to determine when to buy and sell them) Perhaps youd like someone else to deal with the paperwork and administration 2010 - 2222 H Toprac 4 Perhaps youd like some help 2010 - 2222 H Toprac A mutual fund pools the resources of many investors to buy stocks & bonds of many companies The mutual fund owns the stocks & bonds The mutual fund investors own shares of the mutual fund 2010 - 2222 H Toprac 5 Mutual funds to the rescue 2010 - 2222 H Toprac Investors can purchase mutual fund shares directly from the mutual fund Up-front sales loads are deducted from the investors initial investment/deposit The remaining balance is divided by the funds NAV to determine the number of shares of the fund the investor owns 2010 - 2222 H Toprac 6 Mutual funds issue shares 2010 - 2222 H Toprac The Net Asset Value (NAV) is to mutual funds what the stock price is to stocks The NAV is the total market value of all...
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4.3 Mutual Funds - Click to edit Master subtitle style 2010...

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