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Definition
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Term
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Definition
| the amount that the bond is worth |
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Definition
| frequency of coupon payments (typically semi-annually, so = 2) |
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Definition
| contractual rate of interest on the bond that the issuer is responsible for paying. This is stated at an annual rate |
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| par bond, discount bond, premium bond |
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Definition
| trading at, below, and above par |
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Definition
| current market value of the bond, as determined by price. |
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Definition
| the amount of dollars derived from the coupon payments the bondholder receives. |
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Definition
| the contractual date at which the bond must be repaid (equal to the par value) |
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Definition
| bonds with only one repayment of par value: at maturity |
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Definition
| bonds with interim repayments of par value |
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Definition
| bond that can be paid off prior to maturity |
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Definition
| similar to callable, but the investor can sell the bond back before stated maturity |
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Term
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Definition
| bond that has an equity component and can be converted to stock of the issuer under certain terms |
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Term
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Definition
| value weighted average life of a bond |
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Term
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Definition
| internal rate of return n a bond (discount rate) NOTE this is different than coupon, and is determined by market interest rate |
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Term
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Definition
| sum of present value of the coupon payments and present value of the par value of the bond |
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Term
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Definition
| Interest is a contractual obligation -- when a bond is traded between coupon dates the buyer must pay the seller for any interest that has accrued since the last coupon date. |
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Definition
| Inflation, Interest Rate Risk, Maturity Risk, Default Risk |
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Term
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Definition
| displays the yields of a particular class of bonds over the maturity spectrum of the bonds outstanding. |
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Term
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Definition
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Term
| Factors that affect yield curve |
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Definition
| Fed policy, inflation, economic growth, business cycle, supply and demand for funds, investor psychology, government fiscal policy |
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Term
| What are the sources of return? |
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Definition
Price changes
Dividends
Interest
Currency Fluctuations |
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Term
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Definition
- the probability of not earning your expected return
- the volatiliy of your asset
- the probability of permanent loss
- the probability your returns don't keep up with cost of living |
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Term
| What are the 11 steps in investment process? |
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Definition
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Term
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Definition
- liquidity
- Investment horizon
- Regulations
- Tax Considerations
- Unique needs |
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Term
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Definition
| the value of a mutual fund portfolio after deducting all liabilities |
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Term
| Types of Investment Companies |
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Definition
1. Managed investment companies (two types: Open end and Closed end mutual funds)
2. Exchange-traded funds
3. Unit investment trusts |
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Term
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Definition
Shares in a closed-end fund are initially sold like stock in an IPO.
After the IPO, closed-end shares trade in the secondary market, just like common stocks.
The traded price of the closed-end fund may vary significantly from the market value of the underlying assets. This difference can be a premium (traded price > underlying value) or a discount (traded price < underlying value). |
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Term
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Definition
This is the most common type of mutual fund. Open-end simply means that the fund is able to create new shares, and there is no limit on the number of shares.
Mutual Fund Shares do not trade on an exchange or OTC. They are offered and redeemed directly by the fund company. |
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Term
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Definition
For investors, ETFs are less expensive than buying individual securities and open-end mutual funds.
Unlike open-end mutual fund shares, which trade once at day at the closing NAV, ETF shares trade all throughout the day just like individual stocks.
ETFs typically contain very liquid assets, which is what allows them to be continuously priced during the day.
One commission rather than several.
ETFs are non-managed funds, therefore lower fund expenses.
No upfront fees (we’ll discuss these fees later).
Owning an ETF is a passive investment. The investor gets a large number of securities with one purchase.
Studies have shown that holding index funds and ETFs that mimic large indexes usually outperform managed funds. |
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Term
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Definition
Non-managed investment companies.
Money invested initially in a UIT is invested in a portfolio which is fixed for the life of the fund.
A sponsor buys securities which are put into a trust.
The sponsor sells shares in the trust to individuals.
Characteristics:
No active management means low costs and no transaction costs.
Assets tend to be uniform, such as municipal or corporate bonds.
Sponsor sells shares at a premium to market value. |
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Term
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Definition
Money Market
Bond
Equity
Balanced
Asset Allocation
Indexed
International and Global
Specialized Sector
Target Date |
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Term
Hybrid Fund Types
- balanced
- asset allocation
- strategic and tactical
- target funds |
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Definition
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Term
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Definition
Loads
Operating Expenses
Non-standard Fees
Transaction Costs |
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Term
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Definition
A = front end
b = back end
C = level load (paid annually)
note: class C cannot be converted to class A or B shares. |
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Term
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Definition
| Operates automatically and quickly, with little or no effort and no sense of voluntary control. |
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Term
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Definition
| allocates attention to the effortful mental activities that demand it, including complex computations |
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