Financial Markets and Institutions- Final Exam Questions With 100%
Verifie
Solutions!!!
1. Chapter 12 Mutual Funds
2. LONG TERM -Equity funds (Invest only in stocks)
FUNDS (capital -Bond funds (invest in the bond market)
markets) -Hybrid funds (invest in a combination of stocks and bonds)
-Index funds (so formulated that the mimic the performance of an index)
-Exchange-traded funds (a fund whose shares are listed on the stock exchange)
3. SHORT TERM Money Market Funds (invest only in money market securities) commercial paper,
FUNDS repurchase agreements, etc.
4. Fund Objectives -Growth (fund will invest only in assets that are known to experience capital
appreciate; the value is increasing)
-Extreme/Aggressive Growth (fund seeks to invest in assets that experience above
market growth)
-Income (invest in assets because those assets pay periodic income; dividends,
interest in bonds)
-High Income (funds with the objective to invest in assets that pays exceptional
income)
-Balanced (invests in assets that will either appreciate in value or generate income)
-International (invest only in international assets; consistent with investors that
wish to diversify)
5. Open-end funds -number of shares outstanding is not fixed but changes when there are new share
issues and share redemptions by the mutual fund
-can only sell shares back to the mutual fund/ can only buy from mutual fund;
shares not traded
6. Closed-end funds -only a fixed number of shares can be issued by the mutual fund. No share
redemptions are facilitated
, Financial Markets and Institutions- Final Exam Questions With 100%
Verifie
Solutions!!!
-if fund has already issued all its shares, you can only buy/sell to/from someone
in the market place ; traded shares
7. Net Asset Value Total market value of assets under management/number of mutual funds out-
(NAV) standing
-computed on a daily basis, maybe multiple times in a day
-why it's so important: investors buying in and cashing out; price at the time of
occurence; security prices change everyday and multiple times within the day; NAV
changes with them
8. Trading at -when the share is trading at a greater price than the NAV
a premium
(closed-end mu-
tual funds)
9. Trading at -when the share is trading at a lower price than the NAV
a discount
(closed-end mu-
tual funds)
10. Load Vs. No-load > Load: fees or sales commissions usually paid to mutual fund broker
funds
>No-load: mutual fund without the sales commission; purchased directly from the
mutual fund
11. Front-end load -charged when the investment is made
12. Back-end load -charged when the shares are redeemed ; may be charged on assets ending value
or average value
13.
Verifie
Solutions!!!
1. Chapter 12 Mutual Funds
2. LONG TERM -Equity funds (Invest only in stocks)
FUNDS (capital -Bond funds (invest in the bond market)
markets) -Hybrid funds (invest in a combination of stocks and bonds)
-Index funds (so formulated that the mimic the performance of an index)
-Exchange-traded funds (a fund whose shares are listed on the stock exchange)
3. SHORT TERM Money Market Funds (invest only in money market securities) commercial paper,
FUNDS repurchase agreements, etc.
4. Fund Objectives -Growth (fund will invest only in assets that are known to experience capital
appreciate; the value is increasing)
-Extreme/Aggressive Growth (fund seeks to invest in assets that experience above
market growth)
-Income (invest in assets because those assets pay periodic income; dividends,
interest in bonds)
-High Income (funds with the objective to invest in assets that pays exceptional
income)
-Balanced (invests in assets that will either appreciate in value or generate income)
-International (invest only in international assets; consistent with investors that
wish to diversify)
5. Open-end funds -number of shares outstanding is not fixed but changes when there are new share
issues and share redemptions by the mutual fund
-can only sell shares back to the mutual fund/ can only buy from mutual fund;
shares not traded
6. Closed-end funds -only a fixed number of shares can be issued by the mutual fund. No share
redemptions are facilitated
, Financial Markets and Institutions- Final Exam Questions With 100%
Verifie
Solutions!!!
-if fund has already issued all its shares, you can only buy/sell to/from someone
in the market place ; traded shares
7. Net Asset Value Total market value of assets under management/number of mutual funds out-
(NAV) standing
-computed on a daily basis, maybe multiple times in a day
-why it's so important: investors buying in and cashing out; price at the time of
occurence; security prices change everyday and multiple times within the day; NAV
changes with them
8. Trading at -when the share is trading at a greater price than the NAV
a premium
(closed-end mu-
tual funds)
9. Trading at -when the share is trading at a lower price than the NAV
a discount
(closed-end mu-
tual funds)
10. Load Vs. No-load > Load: fees or sales commissions usually paid to mutual fund broker
funds
>No-load: mutual fund without the sales commission; purchased directly from the
mutual fund
11. Front-end load -charged when the investment is made
12. Back-end load -charged when the shares are redeemed ; may be charged on assets ending value
or average value
13.
