investment companies outline

open end company

• can ONLY issue stock
• can borrow $ from bank-leverage
• max: borrow 1/3 of net asset value
• net asset value must be 3x as large as borrowed amount

class A shares, front end load shares,

• net investment=public offering price-sales charge

Class B shares

• no front end sales charge
• contingent deferred sales charge, if redeemed within surrender period

Class C shares

• can be no load shares
• if 12b-1 fee>.25% not no-load

Class X,M shares

• used for investment programs
• f-share mutual fund, shares can be bought at no-load by existing shareholders of another fund managed by same investment company

closed end company

• issue common stock
• issue prefered stock
• issue bonds

An open-end company's net assets must equal at least how much more than its bank borrowing?

• 3 times
• NAV must be 3x or 300% borrowed $
• can borrow 1/3 of NAV