History
This investment product pools money from many investors to buy stocks, bonds, and other assets.
Mutual fund
What does the SEC acronym stand for?
Securities and Exchange Commission
What is a prospectus like?
This type of mutual funds aims to match the performance of the market index like the S&P 500?
What is a passive (index) fund?
When is NAV is calculated?
Around 4pm every business day?
The first modern mutual fund was created in this European country in 1774 by Adriaan Van Ketwich.
The Netherlands
_______ is used to protect investors from single company collapsing.
The Investors Security Act of 1940.
What are two key focus areas of a prospectus?
Fund Goals/ Objectives, Fees/Expenses, Risks, Investment Strategy, Performance/History, Management/Governance, Shareholder Info
This strategy involves a fund manager frequently buying and selling securities to outperform the market.
What is active investing?
what does NAV represent?
This is is the per-share value of an investment fund, such as a mutual fund
What was the first U.S. Mutual fund called?
Massachusetts Investor's Trust
What is the 75/5/10 rule?
75: Assets of company are cash 5: Can't own more than 5% of company stock 10: Can't own more than 10% of an issuers voting stock.
Why are risks and fees included in a prospectus?
To warn potential investors about possible losses.
These funds typically have lower expense ratios because they do not require extensive research or active trading.
What is passive mutual funds?
What's the NAV formula?
Total Assets - Total Liabilities / Total shares outstanding
What Law regulated mutual funds in 1940?
Investment Company Act of 1940
Name 2 things that the Investment Act of 1940 protects.
Protects small investors, Stops hidden fees, Prevent misuse of investor money, Standardize investment companies.
What is investment strategy in a prospectus?
It explains how the fund plans to reach it's goals, including types of assets it invests in.
The main goal of active fund managers is to achieve this compared to a benchmark index.
What is beating (outperforming) the market?
What are differences between NAV and market value?
NAV represents the accounting value assets while market value is dependent on supply and demand.
Who created first index mutual fund for everyday investors?
John Bogle.
______ ______ are required to provide continuous bids and ask quotes to maintain liabilities.
Market Makers.
Management and governance.
This is a a common criticism of active mutual funds, especially after fees are considered.
Why do they underperform the market (after fees)?
What happens to a company when liabilities are higher than assets?
The company or fund has negative net assets, which implies negative net worth.