Investment Chapter 4: Mutual Funds Overview

<p>Index funds (D)</p> Signup and view all the answers

<p>Mutual funds represent a majority of investment company assets. (D)</p> Signup and view all the answers

<p>Brokers may prioritize selling funds that offer higher commissions, potentially neglecting the best interests of investors. (D)</p> Signup and view all the answers

<p>All of the above (D)</p> Signup and view all the answers

<p>Fees charged to cover the costs of marketing and distribution of the fund. (D)</p> Signup and view all the answers

<p>To pool and invest funds from individual investors (C)</p> Signup and view all the answers

<p>Market value of assets minus liabilities divided by shares outstanding (B)</p> Signup and view all the answers

<p>It invests in a fixed portfolio for the life of the fund (D)</p> Signup and view all the answers

<p>They allow investors to cash out by selling to new investors (A)</p> Signup and view all the answers

<p>Hedge fund (B)</p> Signup and view all the answers

<p>They redeem or issue shares at their NAV (C)</p> Signup and view all the answers

<p>They provide diversification through pooled investments (D)</p> Signup and view all the answers

<p>REITs allow for more liquid investments and cash flow from properties (C)</p> Signup and view all the answers

<p>Investment grade (D)</p> Signup and view all the answers

<p>1,459 (A)</p> Signup and view all the answers

<p>$5,214 billion (B)</p> Signup and view all the answers

<p>Tax-exempt money market funds (A)</p> Signup and view all the answers

<p>Both bond and stock funds (B)</p> Signup and view all the answers

<p>7,636 (B)</p> Signup and view all the answers

<p>Through bank equipment sales (D)</p> Signup and view all the answers

<p>(NAV1 - NAV0 + Income distributions and capital gain distributions) / NAV0 (C)</p> Signup and view all the answers

<p>Fund A (D)</p> Signup and view all the answers

<p>High portfolio turnover can lead to tax inefficiency (C)</p> Signup and view all the answers

<p>ETFs can be traded continuously like stocks (B)</p> Signup and view all the answers

<p>$9,400 (C)</p> Signup and view all the answers

<p>Prices of ETFs can vary from NAV (B)</p> Signup and view all the answers

<p>0.25% (A)</p> Signup and view all the answers

<p>They must pay taxes on income distributions (B)</p> Signup and view all the answers

Common name for open-end investment companies, representing 80% of investment company assets.

Total value of assets managed by investment companies, in 2021 U.S. was $23.9 trillion and Non-U.S. was $40 trillion.

Invest in money market securities like commercial paper and CDs.

Mutual funds that specialize in fixed-income securities.

Funds designed to hold both equities and fixed-income securities in stable proportions.

An organization that pools investors' funds to invest in securities.

The value of an investment company's assets minus its liabilities, divided by shares outstanding.

A type of investment company with a fixed portfolio and no active management.

Investment company that issues or redeems shares at NAV based on investor demand.

Investment company with a fixed number of shares; trades like stock on an exchange.

Partnerships where investors pool funds for collective investment.

A company that invests in income-producing real estate and distributes the income to investors.

Private investment vehicles that pool funds from accredited investors and use various strategies.

Funds focused on capital appreciation through stocks.

Funds that combine stocks and bonds for diversification.

The combined total of all equity fund assets, $12,728 billion.

The combined total of all bond fund assets, $5,214 billion.

Funds sold directly by the fund underwriter to investors.

Bonds rated as low risk, safer investments.

The fee paid to brokers or financial advisers for selling shares on behalf of an underwriter.

Situations where brokers may prioritize personal gain over clients' interests when advising on shares.

Costs associated with investing in mutual funds, including operating expenses and load fees.

Different share classes with varying fee structures, reflecting trade-offs in loads and charges.

An annual fee for marketing and distribution of mutual fund shares, part of the fund's expenses.

Rate of return calculates investment performance using NAV and income distributions.

NAV is the value per share of a mutual fund or ETF, calculated at the end of trading day.

Total amount received from an investment over time, including reinvested dividends.

The annual fee expressed as a percentage of a fund's assets, covering operating costs.

Taxation where the mutual fund’s income is taxed only at the investor level, not the fund.

Frequent buying and selling of securities in a fund, often leading to tax inefficiency.

Investment funds that trade on stock exchanges, typically tracking indices like mutual funds.

ETFs usually incur lower taxes than mutual funds due to lower turnover and structure.

Fees that must be paid when purchasing through a broker.

A benchmark used to assess the performance of equity fund managers.

A document detailing a mutual fund's investment objectives, policies, and costs.

Supplementary documentation providing more detailed insights into a mutual fund.

Measures how well mutual funds perform against benchmarks like the Wilshire 5000.