Chapter 13 - Investing in mutual funds Flashcards
Pooled investment fund
An investment vehicle that pools together money from many investors and invests in a variety of securities.
Net Asset value (NAV)
the market value of the securities that a mutual fund has purchased minus any liabilities and fees owed.
Net asset value per share (NAVPS)
calculated by dividing the NAV by the number of shares in the fund.
Open-End mutual funds
funds that sell shares directly to investors and will redeem those shares whenever investors wish to “cash in”
Closed-end funds
funds that issue shares to investors but do not redeem those shares; instead, the fund’s shares are traded on a stock exchange
No-Load mutual funds
sell directly to investors and do not charge a fee
Front-End load mutual funds
charge a fee at time of purchase, which is paid to stockbrokers or other financial service advisers who execute transactions for investors.
Back-end load mutual funds
charge a fee if shares’ are redeemed with a set period of of time.
management expense ratio
the annual expenses incurred by a fund on a percentage basis, calculated as annual expenses of the fund divided by the net asset value of the fund; the result is then divided by the number of units outstanding.
growth funds
focus on stocks that have potential for above-average growth
small capitalization
tend to have more potential for growth than large firms
mid-size capilizations
tend to be more established than small cap firms
dividend funds
focus on firms that pay a high level of dividends
Balanced growth and income funds
contain both growth stocks and stocks that pay high dividends
sector funds
focus on stocks in a specific industry or sector, such as technology stocks
