Lecture5 - Investment Companies Lecture 5: Mutual Funds...

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1 Lecture 5: Mutual Funds ECON435: Financial Markets and the Macroeconomy Anton Korinek Spring 2011 2 Investment Companies allow small investors to “team up” and invest together on a large scale each investor owns shares in the total fund Benefits: diversification professional management lower transaction costs record-keeping and administration 3 Net Asset Value (NAV) NAV = value of each share = Value of Assets – Liabilities Number of shares 4 Types of Investment Companies Managed Investment Companies open-end funds: investor can issue/redeem shares at NAV closed-end funds: investor can trade shares price often below NAV Real Estate Investment Trusts (REITs) Hedge Funds: funds for wealthy investors; minimal SEC regulation 5 Mutual Funds Mutual funds = open-end managed investment companies Different investment policies: money market funds equity funds, e.g. income or growth sector funds, e.g. technology, banks bond funds
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This note was uploaded on 12/21/2011 for the course ECON 435 taught by Professor Staff during the Spring '11 term at University of Maryland Baltimore.

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Lecture5 - Investment Companies Lecture 5: Mutual Funds...

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