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FNCE 322 - Lesson 18
Finance 322 Keywords
18
Finance
Undergraduate 3
10/29/2013

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Term
Mutual Funds
Definition
An investment fund that raises funds from investors, pools the money, and other investments. Each investor owns a share of the fund proportionate to the amount of his or her investment.
Term
Open-end Mutual Fund
Definition
A mutual fund that has the ability to issue as many shares as investors want. As investors buy shares, the fund grows, and when they sell shares, the fund shrinks.
Term
Net Asset Value (NAV)
Definition
The dollar value of a share in a mutual fund. (TOTAL MARKET VALUE OF ALL SECURITIES - LIABILITIES) / TOTAL SHARES OUTSTANDING.
Term
Closed-end Mutual Fund
Definition
A mutual fund that cannot issue new shares. The funds raise money only once, and thereafter the shares can be traded between investors.
Term
Real Estate Investment Trust (REIT)
Definition
An investment vehicle similar to a mutual fund that specializes in real estate investments. There are 3 types: equity, mortgage, or a hybrid of the 2.
Term
Load
Definition
A sales commission charged on a mutual fund.
Term
Load fund
Definition
A mutual fund on which a load or sales commission is charged.
Term
Back-end Load
Definition
A commission that is charged only when the investor liquidates their holdings.
Term
No-load Fund
Definition
A mutual fund that does not charge a commission.
Term
Management Expense Ratio (MER)
Definition
The ratio of a mutual fund's management expenses to its total assets. It should be between .25 to 3%.
Term
Turnover Rate
Definition
A measure of the level of a fund's trading activity, indicating what percentage of the fund's investments are turned over during the year.
Term
Money Market Mutual Funds
Definition
Mutual funds that are invested in a T-bill, banker's acceptance, or commercial paper, and held for a short period of time.
Term
Government Securities Money Market Mutual Funds
Definition
A money market fund that invests solely in Canadian government, short-term securities to avoid any risk whatsoever.
Term
Stock Funds
Definition
Mutual funds that invest primarily into common stock.
Term
Balanced Mutual Fund
Definition
A mutual fund that tries to 'balance' the objectives of long-term growth, income, and stability.
Term
Asset Allocation Fund
Definition
A mutual fund that invests in a mix of stocks, bonds, and money market securities. They aggressively move funds between stocks and bonds in the aim to make profits.
Term
Life Cycle Funds
Definition
Mutual funds that try to tailor their holdings to the investors individual characteristics.
Term
Bond Funds
Definition
Mutual funds that invest primarily in bonds.
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