Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business > MUTUAL FUNDS FINAL NOTES > Flashcards

MUTUAL FUNDS FINAL NOTES Flashcards

1
Q

a collection of investment money pooled from a lot of people to be invested for a specific objective.

A

Mutual fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

are investment companies that pool your money with the money of hundreds, thousands, or
even millions of other investors.

A

Mutual fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

is a type of financial intermediary, which nothing more than an organization that takes
money from people who want to invest and then gives the money to those who need investment capital

A

Mutual fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

When you invest in a mutual fund, you buy shares and become a _____ of the fund.

A

shareholder

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

theoretically have no limit to the number of investors or the amount of money that they hold

A

Open-end funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

simply means that the fund issues as many (or as few) shares as investors demand.

A

Open-end funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

they are usually preferable than the other fund

A

Open-end funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

they attract more investors over time

A

Management talent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

can afford to pay the necessary money to hire leading managers.

A

Management talent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

charge lower annual operating expenses

A

Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

the value of a share (known as the net asset value) always equals 100% of what the fund’s investments (less liabilities) are currently worth.

A

Fee-free selling

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

are those where the mutual fund companies decide upfront, before they take on any investors, exactly how many shares they’ll issue.

A

Closed-end fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

tend to be much smaller and, therefore, more costly to operate.

A

Closed-end fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

analyze and purchase investments that best meet the fund’s stated objectives

A

Fund managers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

requires you to place your money in different investments with returns that aren’t completely correlated.

A

Diversification

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

the most common ownership investment traded on securities markets. If you want your money to grow over a long period of time (and you can put up with some bad years thrown in with the good)

A

Stock funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Bonds are the most common lending investment traded on securities markets. If you need current income and don’t want investments that fluctuate as widely in value as stocks do

A

➢ Bond fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

are lending investments based on short-term loans and are about the safest in terms of risk to your investment among the various lending investments around. If you want to be sure that your invested principal doesn’t drop in value because you may need to use your money in the short term

A

Money market funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

You have convenient access to your money. You can make your initial investment from the
comfort of your living room by filling out and mailing a simple form and writing a check

A

The ultimate couch potato investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

important financial steps for you to take before you invest so you get the most from your mutual fund investments

A

Lining up Your Ducks before You Invest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

include balances on such items as credit cards and auto loans.

A

Consumer debts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

are goal-specific tools and humans are goal-driven animals, which is perhaps why the two make such a good match

A

Mutual funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

simply means how your investments are divvied up among the major types of securities or funds, such as money market, bond, United States stock, international stock, and so on

A

Asset allocation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

if you need to tap into the money within two or
three years or less

A

Money market or short-term bond fund

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

if your time horizon falls between three and seven years

A

Bond funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

for long-term goals, seven or more years down the road

A

Stock funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

allow existing shareholders of stock to reinvest their dividends
in more shares of stock without paying brokerage commissions

A

Dividend Reinvestment Plans

28
Q

you enjoy going to parties and telling of your successes in the stock market

A

The boaster

29
Q

you hate delegating jobs to others, especially important ones, because no one does as good a job as you do

A

The controller

30
Q

you like to be just a little bit different and independent

A

The free spirit

31
Q

index funds that trade like stocks on a stock exchange

A

Exchange-Traded Funds

32
Q

have much in common with closed-end funds where they take an amount of money and buy a number of securities that meet the objectives of the UIT

A

Unit investment trusts (UITs)

33
Q

Load simply means _____

A

commission

34
Q

are quoted as a percentage of the fund’s assets or value.

A

fund’s operating expenses

35
Q

usually written and edited by an attorney who wouldn’t know a lively and comprehensible sentence if it clobbered him on the head with a law dictionary.

A

Prospectus

36
Q

the date so that you know how recent its information is, table of contents, and particular fund family

A

Cover page

37
Q

contain a synopsis of the main attributes of the fund (description of the fund’s investment objectives and the strategies that it employs to accomplish its objectives)

A

Fund profile

38
Q

(when dividends and capital gains are distributed, who manages the fund, how long the fund has been in existence, what the fund’s total assets are and so on)

A

Other fund information

39
Q

(explains in detail what the fund is trying to accomplish and
what risks the fund is subject to)

A

Investment objectives and risks

40
Q

(provides background about the investment adviser who actually manages the investments of this fund)

A

Investment adviser

41
Q

is the price per share of the fund.

A

Net Asset Value (NAV)

42
Q

represents what investors in the fund have earned historically.

A

Total Return

43
Q

tells you how much trading takes place in a fund.

A

Turnover Rate

44
Q

includes Net Asset Value, Total Return and Turnover Rate

A

Financial highlights

45
Q

explain how well the fund has performed recently and why.

A

Chairman’s letter

46
Q

is where the portfolio managers of the fund explain how the
economic environment affected the fund’s performance

A

Report from the Advisor”

47
Q

lists every investment the fund owns where you get the details that tell you exactly where your money is invested.

A

Statement of Net Assets

48
Q

a supplementary document added to a mutual fund’s
prospectus that contain

A

Statement of Additional Information (SAI)

49
Q

contains information about a mutual fund that may not be found in its original prospectus.

A

Statement of Additional Information (SAI)

50
Q

a mutual fund service where you can purchase hundreds of funds without paying any transaction fees (that is, you pay the same cost as if you’d bought the funds through the mutual fund company itself).

A

No Transaction Fee (NTF) funds

51
Q

tend to have higher operating expenses than non-NTF funds

A

No Transaction Fee (NTF) funds

52
Q

no one can predict future movements in the financial markets to know which types of investments will do well and which ones won’t.

A

crystal ball phenomenon

53
Q

the compensation that a supplier of funds expects and a demander of funds must pay.

A

Interest rates and Required Returns

54
Q

takes on a historical perspective (what return did an investment actually provide)

A

Actual returns

55
Q

takes on a forward-looking perspective (what return should we expect the investment to provide in the future given its risk)

A

Expected returns

56
Q

weighs more heavily than actual returns do in a decision-making context

A

Expected returns

57
Q

occurs at the intersection of the supply function and the demand function

A

Equilibrium Interest rate

58
Q

increase in the prices of most goods and services

A

Inflation

59
Q

the riskier the particular investment is, the higher return

A

Risk

60
Q

the general tendency of investors to prefer short-term securities

A

Liquid preference

61
Q

when a loan carries an interest rate below zero, the lender essentially pays interest to the borrower rather than the other way around.

A

Negative Interest Rate

62
Q

the actual rate of interest charged by the supplier of funds and paid by the demander

A

Nominal interest rate

63
Q

the increase in purchasing power that the investment provides

A

Real interest rate

64
Q

Formula in getting the real interest rate

A

(1 + r) = (1 + r*) (1 + i)

65
Q

nominal interest rate

A

r

66
Q

real interest rate

A

r*

67
Q

expected inflation rate

A

i

Business (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions