Inflation reduces the buying power of money
True
John dean has just moved into a new house and needs a lawn mower since he has always lived in apartment and now he has a lawn to mow what type of goal would this be for John?
Durable-products goal
Load Fund
up to 8 1/2 percent of the purchase
No-load fund
No sales charge
Contingent deferred sales load
1-5% of withdrawals, depending on how long you own the fund before making a withdrawal.
Management fee
0.25 to 1.5% per year of the fund's total assets.
12b-1 fee
cannot exceed 1 % of the funds assets per year
Expense ratio
The amount investors pay for all fees and operating costs
Class A shares
Commision charge when share are purchased
Class B shares
Commission charge when money is withdrawn during the first 5-7 years
Class C shares
no commission to buy or sell share of a fund, but may have higher ongoing 12b-1 fees.
Aggress growth funds
buy stocks small, fast-growing companies
Equity income funds
invest in stock companies with a long history of paying dividends
Global stock funds
buy stock in companies in the U.S. and other countries
Growth stock funds
buy stock in companies with higher-than average revenue and earnings
index funds
buy stocks that mirror an index
internation funds
invest in foreighn stocks sold in securities markets throughout the world
Large-cap funds
invest in stocks of companies with capitalization of $10 billion or more
Mid-cap funds
Invest in companies with total capitalization of $2 to $10 billion
Regional funds
buy stock in companies in specific region of the world
Sector funds
buy stock in companies in a particular industry such as biotechnology
Small-cap funds
buy stock in lesser-known companies with a capitalization of less than $2 billion
Socially responsible funds
avoid investing in companies that produce harmful products
High yeid (junkO bond fund
buy corporate bonds that are higher risk and higher yield
intermediate corporate bond funds
buy investment-grade corporate debt that matures between 5-10 years
Long-term corporate bond ufnds
buy investment-grade corporate bond issues with maturities>10 years
Long-term U.S bond funds
invest in U.S Treasury securities with maturities> than 10 years
Municipal bond funds
invest in municipal bonds that provide tax-free interest income
Short-term corporate bond funds
invest in investment-grade bond issues with maturities of 1-5 years
Short term U.S Gov bond funds
invest in us treasury securities with maturities of 1-5 years
World bond funds
buy bonds of foreign companies and governments
Asset Allocation funds
invest in various asset classes, such as stocks and bonds, with precise amounts within each type
Balance funds
invest in both stocks and bonds, with primary objectives of conserving principal, providing income, and long-term growth
Fund of funds
invest in shares of other mutual funds
Lifecycle funds (target-date funds)
initially invest in more risk oriented securities and become increasingly conservative and income oriented as specified retirement date approaches
Money Market funds
Invest in CD's, Government securities, and other safe and highly liquid investments
Family of Funds
investment company manages group of mutual funds, each has diff. financial objective, and exchange privilages allow one to posses liquidity within the fund family. Little to no charge for transaction
Managed funds
Most mutual funds are Managed which means there is a prof. fund manager or a team of managers choosing the investments
Index Mutual fund
mirror image of specific index and has lower expense ration
Majority of mutual funds have...
failed to outperform the S&P 500 index over a long period of time
Index funds have a...
lower expense ratio, typically around 0.50 percent or less
Research is the key...
to determining the best investment
Which websites should one use to research a fund
http://finance.yahoo.com
www.businessweek.com
www.Morningstar.com
Professional Advisory services
-accessd through internet; the fund family and fund name
-fund analysis
-Ratings and Risk
-mgt
-Portfolio mix
-Expenses
-Min. invt
Mutual fund prospectus includes information about:
The funds: risk factors, past performance, type of invt in fund's portfolio, dividends,distributions and taxes, mgt, process to buy or sell shares, services provided to investors, turnover ratio of the fund's investments, how to open account
Newpapers and financial publications
The Wall Street Journal, businessweek, forbes, fortune, Kiplinger's personal finance and money are sources of information, money magazine
How mutual funds are bought and sold
-you can open an account for $250 to over $3,000 depending on the fund & family
-open end funds can be bought directly from the investment company by phone, mail, online, or from a discount broker
-close-end or etf are purchased through securities exhchan
ROI Income dividends
earnings a fund pays to shareholders from dividend and interest income(Taxed on regular income)
Capital Gains
occur when shares are sold at a price > than you paid. When selling, the shares are taxed on a short or long term basis depending on the length of time funds are held.
Capital gains distributions
pmts to shareholders from sale of securities held by the fund. these are taxed as long term capital gains regardless of how long you own shares in the mutual fund. income and cgd can be automatically reinvested
Taxes and Mutual funds
dividend income and capital gain distributions that are reinvested in the purchases of additional shares are still taxable
Turnover ratio
measures the percentage of the fund that has been replaced in one year. In funds that are not tax deferred (401(k) or 403(b)), this will affect tax liability
Many fin planners recommend that investors pick a mutual fund with an expense ratio that is:
1% or less
Another name for a mutual fund that charges a contingent deferred sales load is a class
B
Sloan Richards is buying shares in a mutual fund that invests in companies that have a market capital of less than 2 billion. What type of fund
Small-cap fund
Balanced fund
A mutual fund that invest in common stocks and bonds with the primary objective of conserving capital
Contingent deferred sales loads generally:
Decline gradually until there is no withdrawal fee.
Which of the following is false
there is no need to evaluate mutual funds bc investment companies hire the best prof. mgr to manage their funds
Contractual savings plan
mutual fund that requires investors to make regular purchases over a specified period of time
True
mutual funds that apportion their investments among common stocks and bonds are referred to as balanced funds
True
There are not more exchange-traded funds than there are open-ended mutual funds
Even when professional management, there is still the need for individual investor to evaluate a mutual fund investment
True
True
0.5-1%
Direct real estate investments include single family-dwellings, duplexes, apartments, land, and commercial property
True
The tax laws prevent real estate investors from taking losses in excess of the actual amounts they invest
True
Most gold brokers require a minimum order of ten bullion coins and charge a commission of at least two percent
True
Today real estate investors must use accelerated depreciation methods to recover the costs
False
REITs, Ginnie Maes, Freddie macs, and syndicates do not provide any diversification
False
An example of a direct real estate investment is
real estate dwelling
Aside from a home, the real property investment most widely favored by the small investor is
the duplex, four plex, or small apartment building
Real property equity investments are usually considered attractive during times of
inflationWhat t
Hal Lindon has an equity investment in a pool of mortgages that have been purchased by one of several gov. agencies.
Participation certificate
A REIT is a firm that pools investor funds and invests them in real estate or uses them to make what kinds of loans?
Both construction and mortgage loans
Real estate investments are classified as:
direct or indirect
Harrison ford has invested in something like a mutual fund and that derives income from the interest on property loans. he knows there are federal laws that require this type of investment to distribute at least 90 percent of the income to share
Mortgage REIT
David harris has invested in something that acts like a mutual fund that invests in construction loans and property all over the country and trades on New York stock exchange
Hybrid REIT
During which of the following economic periods is the price of precious metal, such as gold, silver, or platinum likely to increase
inflationary
An advantage of purchasing diamond for investment purposes is that
diamonds are relatively limited in supply
Stuart Michelson has invested in several pieces of real estate. which one of the propertie that stuart owns would be considered commercial real estate
Fourplex that he rents to college students
An example of an indirect real estate investment is:
REIT