Chapter 3 Terms Flashcards
closed-end fund
mgt company that has a fixed capitalization and a fixed # of shares outstanding which may be traded in the secondary market but cannot be sold back ot the company
Whole life insurance
ins that remains in force as long as the policy owner pays the premium
also build a cash value
12-b1 fee
an annual fee charged by a mutual fund for its marketing and distribution costs. also called a maintenance fee or distribution fee
‘A’ shares
class of mf shares that ahve a front-end sales charge, expressed as a percentage of its net asset value
ETFs
an investment fund that contains stocks, bonds or other assets, typically tracking an index and is traded on a stock exchange
Variable universal life ins
combo of variable and universal life insurance. Policyholder is still able to invest in separate accounts as a way to grow cash value, but the monthly premiums are flexible
open end management company
mgt company whose shares are not traded on the secondary market but are bought and sold directly from the fund an dwhose size varies with every purchase or sale
load fund
mutual fund that charges a sales commission
tax qualified variabel annutities
annuities in which contributions are made with pre tax dollars
variable life insuracnce
permanent life insurance policy that allows policy owner to invesst the cash value in securitieis
life income
annuity pmt option in which the insurer pays annuitant an incoem during his lifetime
Assumed interest rate
projected estimate of the rate of return on an annuity contrat at the market offering
what is the role of an underwriter
they assist an inssuer in issuance by purchasing the comp’s shares and reselling them to investors
mutual fund market timing
Mutual fund market timing
Company Logo
A practice in which traders buy and sell mutual funds to profit from the differences between the daily closing NAV and the next day’s NAV due to events that occur between the two days.
front-end load
sales charge that customers are charged up front upon purchasing the shares
surrender period
the length of time that investors in an annuity are reqd to wait brefore making withdrawals without incurring a surrencder fee
C shares issuance and fees
issued with a 1% back-end sales charge if sold within the first year and a higher annual expense than A and B shares
surrender value
amount of cash paid by a lifer insurance policy or annuity to a policy holder who voluntarily terminates a policy before its maturity
bonus annuity
annuity that offers either an upfront bonus or a higher first-year interest rate to entice investors
face amount certificates
debt securities backed by assets such as real property or other securities
life with period certain
annuity pmt option in which insurer pys for a designated amount of time. If the annuitant dies before that times end, the payments are madeto a beneficiary
equity index annuity
annuity that allows the owner to partiicapte in some of the return of the broad investment markets
non-exchange traded REITs
REITs whose unit shares can only be bought through a broker that has been engaged to participate in the non-traded REIT’s offering. Like publicly traded REITs, they must register with the SEC.
target-date fund
asset allocation becomes more conservative as a preselected target date approaches… saving for college or retirement
contingent deferred sales charge
back-end sales charge for a mutual funds B shares paid when shares are sold and that declines toward zero the longer the shares are held
universal life insurance
whole life ins that allows owner to adjust premium and death benefit depending on the amount of coverag desired
non-traditional ETF
funds selected to either exceed performance of a stock index (leveraged) or do the opposite (inverse)
combination privilege
ability to add together an investor’s diff mutual fund holdings that are all a part of the same family to achieve a breakpoint
joint life w last survivor
a life ins or annuity payout option that pays out over two people’s lives
exchange privilege
The right of a mutual fund investor to sell shares of one type of fund and buy shares of a different fund within the same “family of funds” without paying a sales charge.
no load funds
mfs that don’t charge a sales commission usually purchased directly from the mf company or through a discount brokerage
