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Investments 12.6

Investments 12.6. Mutual Funds. Some Advantages to a Mutual Fund. Reduce transaction costs for investors Shares can be purchased in small amounts Reduce risk through diversification Price movements of mutual funds are more predictable than those of individual stocks

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Investments 12.6

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  1. Investments12.6 Mutual Funds

  2. Some Advantages to a Mutual Fund Reduce transaction costs for investors Shares can be purchased in small amounts Reduce risk through diversification Price movements of mutual funds are more predictable than those of individual stocks The past performance of mutual funds is a matter of public record Mutual funds provide full-time professional management

  3. Vocabulary Mutual Fund – an investment offered by an investment company, which accumulates the saving of many individuals and invests them in a portfolio of stock, bonds, or both Net Asset Value (NAV) – the worth of a share of a mutual fund, determined by dividing the total market value by the number of shares outstanding Loading Charge – a fee paid to an investment company either when purchasing shares of a mutual fond or when selling shared, base on a percent of the amount invested Front-Loaded/Type A – charge when you buy Back-Loaded/Type B – charge when you sell

  4. Formulas Needed What does a negative profit mean? Loss!

  5. Find the a) loading charge, b) amount invested after loading charge, and c) number of shares purchased. After getting a tax return of $3,400, Nathan invested in American Mid-Cap Mutual Fund with a net asset value of $20.00 and is front-loaded at 4%.

  6. Find the a) number of shares purchased, b)net selling price, and c) the profit of the investment. Alyssa invested $14,000 in Artisan Large-Cap Mutual Fund what a net asset value of $20.00 at the time of purchased. It had a loading rate of 5.5% back-loaded. Several months later she sold at $21.85 NAV.

  7. Questions?

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