Asset management firms
Asset management firms/money management/fund management firms - answer
manage the funds of individuals, businesses, endowments, foundations, governments
open-end/mutual funds - answer are portfolios of securities and investors own a pro rata
share of the overall portfolio
closed-end funds - answer funds that sell shares like any other corporation and usually
do not redeem their shares. pay broker commission
unit trusts - answerthe number of unit certificates is fixed
1. no active trading of the assets of the unit trust
2. have a fixed termination date
3. the investor knows that the portfolio consists of a specific collection of assets & has
no concern that the trustee will alter the portfolio
mutual funds provide the following benefits: - answer1. risk reduction
2. lower cost of contracting and processing info
3. professional portfolio management
4. liquidity
5. variety
6. payments mechanism
types of funds - answer1. passive: replicate an index
2. active: attempt to outperform an index
fund of funds - answerinvest in other mutual funds
role of underwriter: - answer1. advising the issuer on the terms and the timing of the
offering
2. buying the securities from the issuer
3. distributing the issue to the public
riskless arbitrage - answerwhen a trader may be able to find a security trading at
different prices in two different markets. A trade can result in the simultaneous buying of
the cheaper security and selling the more expensive one
risk arbitrage - answertwo types:
1. arises out of exchange offers for securities of corporations coming out of a
bankruptcy proceeding
2. occurs when a merger or acquisition is announced
Asset management firms/money management/fund management firms - answer
manage the funds of individuals, businesses, endowments, foundations, governments
open-end/mutual funds - answer are portfolios of securities and investors own a pro rata
share of the overall portfolio
closed-end funds - answer funds that sell shares like any other corporation and usually
do not redeem their shares. pay broker commission
unit trusts - answerthe number of unit certificates is fixed
1. no active trading of the assets of the unit trust
2. have a fixed termination date
3. the investor knows that the portfolio consists of a specific collection of assets & has
no concern that the trustee will alter the portfolio
mutual funds provide the following benefits: - answer1. risk reduction
2. lower cost of contracting and processing info
3. professional portfolio management
4. liquidity
5. variety
6. payments mechanism
types of funds - answer1. passive: replicate an index
2. active: attempt to outperform an index
fund of funds - answerinvest in other mutual funds
role of underwriter: - answer1. advising the issuer on the terms and the timing of the
offering
2. buying the securities from the issuer
3. distributing the issue to the public
riskless arbitrage - answerwhen a trader may be able to find a security trading at
different prices in two different markets. A trade can result in the simultaneous buying of
the cheaper security and selling the more expensive one
risk arbitrage - answertwo types:
1. arises out of exchange offers for securities of corporations coming out of a
bankruptcy proceeding
2. occurs when a merger or acquisition is announced
