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FIN 332 Lecture Notes - Lecture 4: Investment Company, Mutual Fund, Index Fund

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pucecicada191
2 Mar 2017
School
WKU
Department
Finance
Course
FIN 332
Professor
Lo

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Document Summary

Investment companies- collect funds from individual investors and lump that money together and invest in a fund (banks, credit unions, insurance, mutual funds) Functions: administration and record keeping- how much did an investor put in, what assets moved, diversification- invest in a wide range of stocks. 2000 shares ko and 3000 shares msft w 4000 mutual fund shares os. For each share, the investor owns share of ko and share of msft: divisibility-investors can own a fraction of a share, reduced transaction costs, professional management. Intrinsic value per share = (mv liabilities / # of shares os) = / # of shares. Mutual fund manages a security worth mil and owes mil. Nav = (assets liab) / # of shares = 5 / 5 = price per share mutual fund. Investment company act of 1940 classifies investment companies: unit investment trust- unmanaged/passive funds; lower management fees.

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Related Questions

QUESTION 1

The World Income Appreciation Fund has current assets with a market value of $4.7 billion and has 190 million shares outstanding. What is the net asset value (NAV) for this mutual fund?

QUESTION 2

The Madura HiGro Fund has a net asset value of $42 per share. It charges a 3.2 percent load. How much will you pay for 200 shares?

QUESTION 3

The World Income Appreciation Fund has current assets with a market value of $4.5 billion and has 130 million shares outstanding. The fund has a current market price quotation of $35.15. What is the front-end load in percentages?

QUESTION 4

You are going to invest in a stock mutual fund with a 5 percent front-end load and a 1.4 percent expense ratio. You also can invest in a money market mutual fund with a 6 percent return and an expense ratio of 0.1 percent. If you plan to keep your investment for 2 years, what annual percentage return must the stock mutual fund earn to exceed an investment in the money market fund?

QUESTION 5

You invested $10,000 in a mutual fund at the beginning of the year when the NAV was $41.53. At the end of the year the fund paid $0.31 in short-term distributions and $1.27 in long-term distributions. If the NAV of the fund at the end of the year was $43.27, what was your return for the year?

QUESTION 6

A closed-end fund has total assets of $330 million and liabilities of $800,000. Currently, 20 million shares are outstanding. If the shares currently sell for $16.06, what is the percentage premium or discount on the fund? (Note: Enter premium as a positive number and a discount as a negative number.)

QUESTION 1

The World Income Appreciation Fund has current assets with a market value of $4.7 billion and has 190 million shares outstanding. What is the net asset value (NAV) for this mutual fund?

QUESTION 2

The Madura HiGro Fund has a net asset value of $42 per share. It charges a 3.2 percent load. How much will you pay for 200 shares?

QUESTION 3

The World Income Appreciation Fund has current assets with a market value of $4.5 billion and has 130 million shares outstanding. The fund has a current market price quotation of $35.15. What is the front-end load in percentages?

QUESTION 4

You are going to invest in a stock mutual fund with a 5 percent front-end load and a 1.4 percent expense ratio. You also can invest in a money market mutual fund with a 6 percent return and an expense ratio of 0.1 percent. If you plan to keep your investment for 2 years, what annual percentage return must the stock mutual fund earn to exceed an investment in the money market fund?

QUESTION 5

You invested $10,000 in a mutual fund at the beginning of the year when the NAV was $41.53. At the end of the year the fund paid $0.31 in short-term distributions and $1.27 in long-term distributions. If the NAV of the fund at the end of the year was $43.27, what was your return for the year?

QUESTION 6

A closed-end fund has total assets of $330 million and liabilities of $800,000. Currently, 20 million shares are outstanding. If the shares currently sell for $16.06, what is the percentage premium or discount on the fund? (Note: Enter premium as a positive number and a discount as a negative number.)

QUESTION 1

The World Income Appreciation Fund has current assets with a market value of $3.3 billion and has 180 million shares outstanding. What is the net asset value (NAV) for this mutual fund?

QUESTION 2

The Madura HiGro Fund has a net asset value of $47 per share. It charges a 3.1 percent load. How much will you pay for 200 shares?

QUESTION 3

The World Income Appreciation Fund has current assets with a market value of $4.5 billion and has 130 million shares outstanding. The fund has a current market price quotation of $35.36. What is the front-end load in percentages?

QUESTION 4

You are going to invest in a stock mutual fund with a 7 percent front-end load and a 1.4 percent expense ratio. You also can invest in a money market mutual fund with a 4 percent return and an expense ratio of 0.1 percent. If you plan to keep your investment for 3 years, what annual percentage return must the stock mutual fund earn to exceed an investment in the money market fund?

QUESTION 5

You invested $10,000 in a mutual fund at the beginning of the year when the NAV was $41.56. At the end of the year the fund paid $0.38 in short-term distributions and $1.25 in long-term distributions. If the NAV of the fund at the end of the year was $43.91, what was your return for the year?

QUESTION 6

A closed-end fund has total assets of $310 million and liabilities of $800,000. Currently, 20 million shares are outstanding. If the shares currently sell for $15.41, what is the percentage premium or discount on the fund? (Note: Enter premium as a positive number and a discount as a negative number.)