Packed Products Flashcards
Packaged Products
investment products that are regulated and sold to retail investors. They include insurance products, securities, and banking products.
3 types of investment companies
face amount, management, UNIT
2 types of management companies
open end & Close end
open end management
mutual funds that issue UNLIMITED # of shares, NONNEGOTIABLE, continuous offer
close end management
NONREDEEMABLE, ONE time stock issue, NEGOTIABLE
open ended only issues
common stock only
open end redeem at what?
NAV
close end issues what
common, preferred, debt
UNIT companies
where they issue so investors have a right to benefits and own 1% of every security of trust
2 types of UNIT
fixed / non fixed
is open or close ended need a prospectus
open end
custodian role in a management company
safeguard funds, compensated with custodial fees
investment advisor role in company
manage fund, paid with management fees
selling group role
broker-dealers that sell at POP and get commission
rule for a fund to be diversified
75%,5%,10%
75 - fund assets invested in securities
5 - or less invested in 1 issuer
10 - max of voting
operating expenses in Mutual Funds
management, custodial, print/mail, legal fee, 12B-1 fees
deciding in types of funds helps investor?
helps them decide one to suit their goals
Public offer Price formula
NAV + Sales charge (8.5%)
open ended pricing is?
buy @ POP, rebuy @NAV
what is forward pricing?
used in open ended funds where orders are executed at next NAV
close ended pricing is?
buy @ ASK + COMMISSION, sell @ BID - COMMISSION
what must be offered to charge 8.5% max sales charge?
letter intent, rights accumulation, breakpoints
breakpoints
reduced sales charge for larger initial investment
rights accumulation
offer lower fee if buying in same fund family
letter intent
13 months max to increase $ amount
12 B1 Fees
fees consisted of marketing, advertise, service
Contingent deferred
B share
no conversion pledged
C share
long term investment share
A
Expense ratio formula
t. expense / T. net asset
what do expense ratio cover
it covers operating expenses
unethical practices
churn, no bk point disclose, Class B bad recommendation, sell dividend
Exchange traded funds
open end, 2nd market
exchanged traded notes
bond-like, 2nd market, loan backed by bank credit
REIT
75, 75, 90
relate to real estate, invest in real estate, net income distributed
Hedge funds
illiquid, risky, management fees, private
DPP
illiquid, limited partnership
Exploratory program
high risk, drill in unknown areas, most speculative
Developmental
drilled near existing, moderate risk and return potential
Income
buy wells with proven reserves, benefit from depletion deductions, least risky
Class A shares
front end loaded funds, front end sales charges included in POP, low 12b 1
Class B shares
back end loaded funds with contingent deferred sales charge, high 12 b 1
Class C shares
no front load, best for short term investors
how many days can letter intent be backdated
90 days
