AFM121 Chapter Notes - Chapter 18: Mutual Fund

66 views2 pages

lemonbeetle804

16 Jun 2018

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM121

Professor

Steve Balaban

For unlimited access to Textbook Notes, a Class+ subscription is required.

Chapter 18

Open End Funds (Mutual Funds): Continually issue and redeem their units on

dead at a value that is very lose to the et asset or reak up value per uit

of the fud’s portfolio.

Trust Deed: Establishes

- The fud’s ivestet ojetives

- The fud’s ivestet poliy

- Any investment restrictions

- Details regarding the fund manager, distributor, and custodians

- Which class of units will be sold to the public

Offering Price: Refers to the price an investor pays for a share or unit in a mutual

fund.

Redemption Price: Refers to the price investors receive when they sell shares or

units back to the fund.

Net Asset Value Per Share (NAVPS)

NAVPS = (Total Assets – Total Liabilities) / (Total # units or shares)

Load Funds: Charge a commission on the purchase and/or sale of fund units or

shares.

Front-End Load: Charge commission when units are purchased.

Sales price = NAV/(1 - %fee)

Back-End Load: Charge commission when units or sold.

Sales price = NAV * (1 - %fee)

find more resources at oneclass.com

Unlock document

This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Open end funds (mutual funds): continually issue and redeem their units on de(cid:373)a(cid:374)d at a value that is very (cid:272)lose to the (cid:374)et asset or (cid:862)(cid:271)reak up(cid:863) value per u(cid:374)it of the fu(cid:374)d"s portfolio. Details regarding the fund manager, distributor, and custodians. Which class of units will be sold to the public. Offering price: refers to the price an investor pays for a share or unit in a mutual fund. Redemption price: refers to the price investors receive when they sell shares or units back to the fund. Navps = (total assets total liabilities) / (total # units or shares) Load funds: charge a commission on the purchase and/or sale of fund units or shares. Front-end load: charge commission when units are purchased. Back-end load: charge commission when units or sold. Sales price = nav * (1 - %fee) No-load funds: charge management fees such as trailer (paid to manager) or distribution (paid to salespeople).

Related Questions

Question 11

Advantages of mutual funds include

	A.	professional management.
	B.	all of these.
	C.	liquidity.
	D.	diversification.

Question 12

Which of the following types of investment companies operates much like an index fund?

	A.	exchange-traded fund
	B.	unit investment trust
	C.	closed-end fund
	D.	REIT

Question 13

A common stock fund that invests in only one industry is called a(n) ____ fund.

	A.	maximum capital gains
	B.	growth and income
	C.	index
	D.	sector

Question 14

Mutual funds that charge a load do so to compensate

	A.	fund managers.
	B.	brokers.
	C.	shareholders.
	D.	the SEC.

Question 15

Your first task in selecting a mutual fund is to

	A.	review your investment policy.
	B.	locate sources of comparative performance data.
	C.	eliminate funds inappropriate for your investment goals.
	D.	screen and compare funds that meet your investment criteria.

Question 16

Taxes on annual earnings from mutual funds can be avoided

	A.	while those amounts are kept in an IRS-qualified retirement account.
	B.	as long as the mutual shares are not sold.
	C.	while those amounts are kept in an IRS-qualified retirement account and if those earnings are interest from municipal bonds.
	D.	if those earnings are interest from municipal bonds.

Question 17

Mutual funds permit automatic income reinvestment of

	A.	ordinary income dividend distribution.
	B.	none of these.
	C.	both ordinary income dividend distributions and capital gains distributions.
	D.	capital gains distribution.

Question 18

The type of mutual fund that is not actively managed is called a(n) ____ fund.

	A.	emerging market
	B.	money market
	C.	index
	D.	sector

Question 19

A mutual fund that does not assess a sales charge at the time of the investment purchase is called a ____ fund.

	A.	back-end load
	B.	front-end load
	C.	low-load
	D.	no-load

Question 20

Open-end mutual funds

	A.	make up about 75 percent of all mutual funds.
	B.	are sold only through brokers.
	C.	are sold at their current net asset value.
	D.	are sold to other investors on a secondary market.

apricotsnail400

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.)

viridianyellowjacket449

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

QUESTION 4

QUESTION 5

QUESTION 6

greencat205

AFM121 Chapter Notes - Chapter 18: Mutual Fund

Document Summary

Get access

Related Documents

AFM121 Chapter Notes - Chapter 18: Client Confidentiality, 6 Years, Personal Bankruptcy

AFM121 Chapter Notes - Chapter 18: Canadian Securities Course, Client Confidentiality, Mutual Fund

AFM121 Lecture Notes - Lecture 17: Client Confidentiality, Hedge Fund, Direct Selling

Related Questions