In each blank, try to type in the
word that is missing. If you've
typed in the correct word, the
blank will turn green.
If your not sure what answer should be entered, press the space bar and the next missing letter will be displayed. When you are all done, you should look back over all your answers and review the ones in red. These ones in red are the ones which you needed help on. Question: Mutual Answer: pooling fund of a group of investors--is a form of financial intermediary Question: contribution plansAnswer: almost same as 401k plans; you where the funds go Question: Advantages of Answer: 1. diversification 2. professional management 3. minimum investment Question: Disadvantages of Answer: 1. risk 2. costs 3. Question: Investment Answer: a business that specializes in pooling funds from individual investors and investing them; all MFs are investment co.s but not all investment co.s are Question: Open-end Answer: can sell new shares to anyone that wants to buy, and redeem from wanting to sell Question: -end FundsAnswer: the number of shares is fixed and never changes; have to buy them from another investor & have to sell them to investor Question: Net Asset Answer: (total value of assets - liabilities)/number of outstanding shares; NAV of a MF will change every day bc the value of the held by the fund fluctuates Question: NAV and Open-end Answer: Shares in an open-end fund = Question: NAV and Closed-end Answer: Share prices may or may not be = to NAV shares are bought and sold in the stock markets Question: Creation of Answer: Most mutual funds are created by investment advisory firms (say Fidelity Investments) or brokerage firms with investment advisory operations (say Lynch) Question: Taxation of CompaniesAnswer: investments are treated as "regulated companies" for tax purposes; doesn't pay tax on its investment income, fund shareholders pay taxes Question: Qualification as a regulated investment Answer: 1. Hold almost all its assets as investments in stocks, bonds, and other securities
2. Use no more than 5% of its assets when acquiring a particular security
3. Pass through all realized investment to fund shareholders
Question: MF documents Answer: must produce a prspectus to any investor wishing to purchase shares and an annual to their shareholders Question: MF and feesAnswer: 1. sales charges (or loads) 2. 12b-1 fees 3. management fees 4. trading Question: -end loadAnswer: sales charge levied on purchases of shares in some funds; usual 5%; expressed as a percentage of the offering price, not NAV; A-shares Question: load Answer: funds that loads Question: no-load Answer: funds that have no Question: offering Answer: price paid in excess of the NAV when you purchase in a load fund Question: Answer: difference between the price and the NAV; shares in no-load funds are sold at NAV Question: low-load Answer: with front-end loads 2-3% Question: back-end Answer: charges on redemptions
called CDSC; B-shares Question: CDSC; deferred sales chargesAnswer: also called back-end load, sales charge when investors redeem shares Question: loadsAnswer: investors pay an added fee, usually 1%, every year they're in the Question: 12b-1 Answer: allows funds to spend up to 1% of fund assets annually to cover distribution and costs; Question: no-load fundsAnswer: MFs with no front-end or back-end and no or min 12b-1 Question: "no-so-pure" Answer: may have no loads but charge hefty 12b-1 fees Question: management Answer: Hold almost all its assets as investments in stocks, bonds, and other securities; Use no more than 5% of its assets when acquiring a particular security
Pass through all realized investment income to fund Question: Trading Answer: Not reported directly; Funds must report "turnover," is related to the amount of trading; The higher the turnover, the more trading has occurred in the fund; The more trading, the higher the trading costs Question: Answer: measures how much trading a fund does; the of total purchases or sales during a year / ave daily assets Question: shareholder transaction Answer: loads and deferred sales Question: fund expensesAnswer: management and 12b-1 fees, legal, accounting, reporting costs, director Question: short-term Answer: money market mutual Question: money market mutual MMMFsAnswer: mutual funds specializing in money market instruments; $1 NAV to make them bank accounts; depending on type of securities MMMFs can be taxable or tax-exempt Question: the buck"Answer: NAV for a MMMF < $1 Question: money market accounts MMDAsAnswer: like MMMFs but MMDA account is a bank and offers FDIC Question: long-term Answer: invest in long-term ; stock funds, bond funds, balances funds |
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