unit 14 Flashcards
3 categories of investment companies
face-amount certificate
unit investment trust
management companies(open and closed)
requirements for investment company registration with sec
must have 100k private capitalisation
the clearly defined investment objective
annual financial reports to sec
semiannual to shareholders
shareholder rights to vote
- changing nature of business(from open to closed)
- changing investment objective
- changing investment advisor
structure of investment companies
board of directors
BOD can’t have felonies or securities midimneanors
min 40% noninterested
Investment advisor to manage portfolio for fee
2 year contract, renew annually
max 60 day termination
must be in writing
inlawful for registered investment company to
- margin trading
- short selling
- joint trading
- acquire more than 3% of the voting shares of another investment company
open end
continuos primary offering prespectus required only common stock redeemable shares no secondary trading
closed end
fixed shares no prospectus after ipo issues common, preferred, or bonds supply and demand secondary(exchange/otc)
pricing of closed end funds
supply and demand
can be at discount or premium of nav
pricing for open end funds
priced is based on NAV
assets-liabilities/ number of shares
based on FOWARD PRICING
12-b1
used for marketing and promotion annual expense paid out of funds nav paid on quarterly basis not cdsc subject to annual approval
testable
maxmium 12b1 fee is .75%
no load funds limited to .25%
class a
investors pay sales charge on each purchase
no front end load on no load funds
class b
back end
investors pay decling charge at redemption
based on nav(not POP) at redemption
higher 12b then class a
good for long time
class c shares
level load
purchase at nav with 1% cdsc for 1 year
higher 12b than A
good for short term
breakpoint ok for
not for
individiauls and spouses
parents and dependent children
entity formed as business partner
not for investment clubs
private funds
not registered with sec or states
fund manager registered if not exempt
high risk-low liquidity
high comp to managers
look for going concerns and to turn it into something better
venture capital
come in at very early stages
hedge funds registration
not required to be registered with SEC
have limited transparency limited liquidity high expenses managers usually have interest only for accredited or qualified investors
reits and flow through
not flow through vehichles like DPP
Taxation on a reit
in the majority of cases, dividends are taxed as ordinary income
capital gains distributions are treated as long-term capital gains
The Investment Company Act of 1940 requires certain types of investment companies to compute their net asset value on a regular basis. Excluded from that requirement are
face amount certificates
Can reits loan money for commercial construction projects.
yes
what not to consider when dealing with mutual funds
liquidity
The most common form of organizational structure for venture capital investment is the
limited partnership
