Chapter 4 Essay

1468 words - 6 pages

Chapter 4- Mutual Funds and Other Investment Companies

Why buy mutual fund: people are lazy if you are trading stocks you have to give basis data for transactions you make for takes but with a mutual fund they do it for you. Diversification

** an individual investor choosing a mutual fund should consider not only the fund’s stated investment policy and past performance, but also management fees and expenses.**

4.1 INVESTMENT COMPANIES

Investment Companies do the following tasks: WHY MUTUAL FUNDS??

• Administration & record keeping (people don’t want to do it themselves)

• Diversification & divisibility (diversified portfolio)

• Professional management

...view middle of the document...

3 MUTUAL FUNDS

Mutual fund: name for an open-end investment company

Each mutual fund has a specific investment policy

Investment Policies:

• Described in the prospectus (each fund has a specific policy described in prospectus)

• Management companies manage a family of mutual funds. Some management companies include:

' Fidelity

' Vanguard

' Putnam

' Dreyfus

• Each offers an array of open-end mutual funds with different investment policies

Types of Mutual Funds: Any market sector

• Money Market

• These funds invest in money market securities (C/P, BA, CDs)

• Maturity a little more than a month

• NAV is fixed

• Equity

• Invest in stock

• Income funds- shares with high dividend yields (capital gains)

• Growth funds- current income not capital gains (riskier)

• Specialized Sector

• A type of equity fund that is called a sector fund

• Concentrate on an industry

• Bond

• Invest in fixed-income sector

• Corporate bonds, treasury bonds, municipal bonds

• Balanced Funds

• Entire investment portfolio

• Hold both stocks and bonds

• Life-style funds are balanced funds in which the assets are aggressive to conservative

• Targeted-maturity funds become increasingly conservative as age increases

• Asset Allocation and Flexible

• Hold both stocks and bonds like balanced funds

• Market timing and not designed to be low-risk investments

• Indexed

• Tries to match the performance of a broad market index

• The fund buys shares in securities included in a particular index

• International

• Invest in securities of firms located outside the U.S.

How Funds Are Sold:

• Directly marketed or indirectly marketed

• Direct-sold through the mail, over the phone, and internet (by the underwriter)

• Half the fund sales today are distributed through a sales force

• Revenue sharing on sales force- company pays the brokerage for priority treatment when making recommendations

' Potential conflicts of interest

' It must be disclosed to the investor

• Financial supermarkets: more common for open trades

• Can sell shares in many different complexes and splits management fees with mutual fund company

• Shwab.com offer mutual funds

4.4 COSTS OF INVESTING IN MUTUAL FUNDS (downside of mutual funds)

Fee Structure: management fees and other expenses

• Fee Structure

' Front-end load- commission fee paid when you purchase the shares (to pay brokers who sell the funds) sales commission you pay to invest

' Back-end load- redemption fee incurred when you sell your shares (sales charge on the way out)...

Other Papers Like Chapter 4

Mgmt340 Chapter 3, 4 Essay

615 words - 3 pages Chapter 3: Problems 2 & 4 2. What are some sources of risk in a systems analysis and design project, and how does a project manager cope with risk during the stages of project management? 2. Some sources of risk in a systems analysis and design project are resources, current technology, and rules and regulations. Sometimes, resources are not always available whether it be manpower or materials and software. Current technology can

Chapter 4 Learning Essay

933 words - 4 pages Chapter 4 Learning outcomes 4-1 Identify the four major types of tissues in the body and describe their roles. The four major types of tissues are epithelial, connective, muscle, and neural tissue. The functions of each are that the epithelial tissue covers exposed surfaces, lines internal passageways, and chambers, and forms glands. The connective tissue fills internal spaces, provides structural support for other tissues, transports

Salvatore's Chapter 4

799 words - 4 pages Salvatore’s Chapter 4 Discussion Question 8 (a) The quantity of household natural gas decreases by 14 percent in the short run because for every 1 percent increase in price, the quantity demanded decreases by 1.40 percent. The quantity of household natural gas decreases by 21 percent in the long run because for every 1 percent increase in price, the quantity demanded decreases by 2.10 percent. (b) The quantity of electricity decreases

Acc 557 Chapter 4

4982 words - 20 pages CHAPTER 4 Completing the Accounting Cycle ASSIGNMENT CLASSIFICATION TABLE | | | | |Brief | | | |Learning | |Questions | |Exercises | |Do It! | |Objectives

Economic Chapter 7-4

1490 words - 6 pages Chapter 7: Elasticity 1 What you will learn in this chapter 1. Define and measure elasticity of demand and elasticity of supply. 2. Determine the relationship between demand elasticity and total revenue. 3. Understand the factors that determine elasticity of demand and elasticity of supply. Punchline • Imagine that some event drives up the price of gasoline (think about two examples) • How would consumers respond to the higher price? â

Chapter 4 - Javascript

810 words - 4 pages JavaScript 4th Edition Answers to Review Questions Chapter 4 1. Which of the following objects is also referred to as the global object? a. Document object b. Window object(a) c. Browser object d. Screen object 2. Which of the following elements in the browser object model are referenced with arrays? (Choose all that apply.) a. images(a) b. frames(a) c. forms(a) d. paragraphs 3. Which of the following terms does not refer to the

Chapter 4 Solutions

1179 words - 5 pages Chapter 4 Review Questions 1. Your company has four departments: Marketing and Sales, Manufacturing, Product Research, and Business. Which of the following Active Directory container design plans might you use to best manage the user accounts and network access needs of each department? a. Create four trees. b. Create four parent domains in one site. c. Create four OUs in one domain. d. Create four trees and map them to four domains

Chapter 4 Job Costing

1473 words - 6 pages CHAPTER 4 JOB COSTING TRUE/FALSE 1. Direct costs are allocated to the cost object using a cost-allocation method. Answer: False Difficulty: 1 Objective: 1 Terms to Learn: cost-allocation base Indirect costs are allocated to the cost object using a cost-allocation method. 2. Quality control costs may be a direct cost of the Manufacturing Department, but an indirect cost of an individual job. Answer: True

Chapter 4. Solution to End-of-Chapter Comprehensive/Spreadsheet Problem

1091 words - 5 pages Chapter 4. Solution to End-of-Chapter Comprehensive/Spreadsheet Problem Problem 4-24 Corrigan Corporation's December 31 Balance Sheets Assets 2011 2010 Cash $72,000 $65,000 Accounts receivable 439,000 328,000 Inventories 894,000 813,000 Total current assets $1,405,000 $1,206,000 Land and building 238,000 271,000 Machinery 132,000 133,000 Other fixed

Ccna 1 Chapter 4 Study Materials

1124 words - 5 pages 1. [pic] ccna 1 chapter 4 answers 100% 2011 Refer to the exhibit. What two pieces of information can be determined from the output that is shown? (Choose two.) The local host is using three client sessions. The local host is using web sessions to a remote server. The local host is listening for TCP connections using public addresses. The local host is using well-known port numbers to identify the source ports. The local host is

Chapter 4 Analysis of Financial Statements

3744 words - 15 pages CHAPTER 4 ------------------------------------------------- ANALYSIS OF FINANCIAL STATEMENTS 1. A firm wants to strengthen its financial position. Which of the following actions would increase its quick ratio? a. Offer price reductions along with generous credit terms that would (1) enable the firm to sell some of its excess inventory and (2) lead to an increase in accounts receivable. b. Issue new common stock and use the

Related Essays

Chapter 4 Essay

994 words - 4 pages CHAPTER 4 Presentation, Analysis, and Interpretation of Data This chapter presents the data gathering of the study, analysis on the effects of television advertisements, and interpretation of the results from the conducted survey. Table 1 Age Profile of the Respondents |Age |F |% | |21 - 23 |7

Chapter 4 Essay

631 words - 3 pages Chapter 4 Types of Change First order: incremental change, maintain and develop the organization, they are changes designed to support organizational comunity and order. Fine-tuning, incremental Adaptive, incremental but recreative: * Individual initiatives: small-scale changes, personal initiatives, identifying and emplementing small-scale changes. Individual ability to create or exploit a tech. 1. Autocratic 2. Meritocratic

Chapter 4 Essay

892 words - 4 pages least one thing is for certain: as new consumer patterns emerge, companies like BMW and Daimler will have to respond to keep up. By creating programs like BMW on Demand and car2go, these companies are paying attention to who these new consumers are and what they’re looking for. CASE ASSIGNMENT CHAPTER 4: Daimler/BMW: A New Breed of Driver Open-ended questions 1. Discuss environmental factors related to population that are changing the way

Petrie Case Chapter 4 Essay

421 words - 2 pages Petrie Case Chapter 4 Chapter 4 1. IS steering committees: Steering Committee: A group or high-level stakeholders that provides guidance, direction and control to a project within an organization. Major Functions of an IS Steering Committee: a. Building a Business Case for the project b. Planning c. Providing assistance and guidance d. Monitoring the progress e. Controlling the project scope f. Resolving conflicts IS Steering