Essentials of Investments: Chapter 4 - Mutual Funds and Other Investment Companies presents about Investment Companies, Net Asset Value, Types of Investment Companies, How Funds Are Sold, Costs of Investing in Mutual Funds. | CHAPTER 4 Mutual Funds and Other Investment Companies INVESTMENTS | BODIE, KANE, MARCUS McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. 4-2 Investment Companies • Pool funds of individual investors and invest in a wide range of securities or other assets. • Services provided: – Administration & record keeping – Diversification & divisibility – Professional management – Reduced transaction costs INVESTMENTS | BODIE, KANE, MARCUS 4-3 Net Asset Value Calculation: Market Value of Assets - Liabilities Shares Outstanding INVESTMENTS | BODIE, KANE, MARCUS 4-4 Types of Investment Companies • Unit Trusts – Fixed portfolio of uniform assets – Unmanaged – Total assets have declined from $105 billion in 1990 to $29 billion in 2009 INVESTMENTS | BODIE, KANE, MARCUS 4-5 Types of Investment Companies • Managed Investment Companies – Open-End • Fund issues new shares when investors buy in and redeems shares when investors cash out • Priced at Net Asset Value (NAV) INVESTMENTS | BODIE, KANE, .
