mutual_funds

mutual_funds - FINANCE431 Investments Lecture 4: Mutual...

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FINANCE 431 Investments Lecture 4: Mutual Funds and Other Investment Companies
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FIN 431: Investments 2 Investment Companies Collect funds from individuals and invest in a wide range of assets. Diversification divisibility expertise transaction costs record keeping
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FIN 431: Investments 3 Net Asset Value Ownership in assets are divided into shares and the value of each share is measured by its net asset value (NAV) NAV = Market value of assets minus liabilities / shares outstanding Example Assets: $14,754 million Liabilities: $ 1,934 million Shares: 419.4 million NAV = (14754 - 1934) / 419.4 = $ 30.57 per share
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FIN 431: Investments 4 Unit Investment Trusts Money pooled from investors that is invested in a portfolio fixed for the life of the trust uniformity of assets unmanaged Fixed-Income UIT Government securities Corporate bond Municipal bond International bond Equity UIT
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FIN 431: Investments 5 Mutual Funds Managed Investment Companies open-end: Funds can redeem or issue shares at NAV. Namely, investors can sell shares back to the fund at NAV. closed-end: do not redeem or issue shares. Investors who want to cash out must sell to other investors. Shares of closed-end funds can be traded like common stocks; prices may deviate from their NAV (often at a discount) Fund “Families” Fidelity Vanguard
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FIN 431: Investments 6 Types of Mutual Funds Each mutual fund has a specified investment policy, and we can classify mutual funds accordingly: Equity Funds Fixed-Income Funds Money Market Funds Balanced Funds Asset Allocation Funds Index Funds Specialized sector Funds
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This note was uploaded on 04/09/2012 for the course FIN 431 taught by Professor Sun during the Spring '12 term at Old Dominion.

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mutual_funds - FINANCE431 Investments Lecture 4: Mutual...

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