Module 16 Finance

investment company

A company which pools the funds of investors and invests them to achieve certain stated objectives.

reinvestment plan

A formal process for investors to buy additional shares of a mutual fund automatically with earnings from that fund.

back end

A fund with a sales charge payable at exit the rather than at the time of purchase.

closed-end

A mutual fund created with a specified and fixed number of shares available for investment, and which is traded in the secondary market.

open-end

A mutual fund which buys and sells its own shares, and which can create new shares as demand for the shares increases.

expense ratio

A mutual fund's expenses per dollar of assets, the ratio is a measure of a mutual fund's efficiency in managing cost, and is determined as the fund's total expenses divided by the fund's asset holdings.

hidden loads

Fees intended to cover the cost of both marketing and the distribution of investment company shares. These fees, also known as 12(b)-1 fees.

family

Name given to a group of funds all sponsored by the same entity

net asset

The basic value of a share of mutual fund stock and calculated as the total assets of the fund less the total liabilities of the fund

load

The sales fee or commission charged for the purchase of some mutual funds.