Exam 1 - Chapter 4 - [Book] Flashcards
_______ are financial intermediaries that collect funds from individual investors and invest those funds in a potentially wide range of securities or other assets. Pooling of assets is the key idea behind investment companies. Each investor has a claim to the portfolio established by the investment company in proportion to the amount invested. These companies thus provide a mechanism for small investors to “team up” to obtain the benefits of large-scale investing.
Investment companies
_______ Financial intermediaries that invest the funds of individual investors in securities or other assets.
investment companies
_______
Assets minus liabilities expressed on a per-share basis.
net asset value (NAV)
_______
Money pooled from many investors that is invested in a portfolio fixed for the life of the fund.
Unit investment trusts
_______ ____
A fund that issues or redeems its shares at net asset value.
open-end fund
_______ ____ Shares may not be redeemed, but instead are traded at prices that can differ from net asset value
closed-end fund
_______
A sales commission charged on a mutual fund.
load
_______ _______
A private investment pool, open to wealthy or institutional investors, that is largely exempt from SEC regulation and therefore can pursue more speculative policies than mutual funds.
hedge fund
_______
Mutual funds that primarily invest in shares of other mutual funds.
funds of funds
_______
Annual fees charged by a mutual fund to pay for marketing and distribution costs.
12b-1 fees
_______
The value of research services that brokerage houses provide “free of charge” in exchange for the investment manager’s business.
soft dollars
______
The ratio of the trading activity of a portfolio to the assets of the portfolio.
turnover
______
Offshoots of mutual funds that allow investors to trade entire portfolios much like shares of stock.
exchange-traded funds
