Unit 8: Investment Companies

Question 1

% of fund’s investments that must be in the asset suggested name. Ex: Bio tech fund

Answer 1

80% bio tech stocks

Question 2

Most levered and inverse funds reset…

Answer 2

Daily

Question 3

Levered & Inverse Funds

Answer 3

Levered: seek to deliver a multiple on tracking index (2x, 3x)
Inverse: deliver the opposite of the tracking index
Investors: short-term and sophisticated

Question 4

NAV calculation

Answer 4

(Total Assets - Liabilities) / Shares Outstanding

Question 5

Public price offering (POP)

Answer 5

what the purchasers of mutual funds pay

Question 6

POP =

Answer 6

NAV + Sales Charge
or
NAV / (100% - Sales Charge %)

Question 7

Sales Charge % =

Answer 7

(POP - NAV) / POP

Question 8

Class A shares

Answer 8

front end load
lower 12b-1 fees
retail investors

Question 9

Breakpoints

Answer 9

reduce cost for Class A shares based on the amount invested in the fund
Does NOT include investment clubs (pooled money)

Question 10

Reinvested Dividends

Answer 10

No fees
Taxed
increase basis

Question 11

Interval Funds

Answer 11

type of investment company
Closed-end fund, not exchange traded (less liquidity)
Investors can sell shares only quarterly
Priced at NAV

Question 12

Business Development Company (BDC)

Answer 12

Invest in newly developing or financially troubled small and mid-sized companies with debt or equity
Close-end fund, exchange-traded
Risky
accredited and non-accredited investors
90% income distributed each year