Mutual funds
- open end funds
- open-shares can be created or reedemed
- open end investment companies
- professional advisors are paid a management fee,%age of net asset value
- net asset value, NAV, value of assets of investment company-cash+held securities (investments firm has made)-liabilities
- calculate every day at close of New York Stock Exchange,NYSE
- Public Offering Price, POP, price customers pay for shares=net asset value + sales charge
prospectus,
- MUST come with new sale-when sales suggestion made or before transaction is complete
- how shares can be bought or redeemed
12b charges and fees, asset based sales charges
- pay for advertising, marketing, prospectus costs
- a.k.a. asset based sales charges
- used to pay broker/dealers for selling mutual funds
mutual fund advantages
- diversification
- liquidity
- professional management
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