FIN380 Exam 3 (2025-2026) Most Recent
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Study Resources / Already Graded A+
What are mutual funds
1. pool money from multiple investors
2. invest money based on fund objectives
Why mutual funds? (4 benefits)
1. diversification
2. professional management
3. smaller investment
4. easy
3 sources to find good mutual fund
1. Morningstar
2. Moody's
3. Financial publications
Open end mutual funds (majority) (# of shares, how you purchase, do what with
shares)
1. sell unlimited shares
2. purchase through agent
3. mutual fund will buy back shares
NAV
Net Asset Value = [(market value of owned securities)-(loans)] / [number of
shares]
,Closed end mutual fund (minority) (# of shares, how they trade, share price
determined how, advertising?)
1. sell limited shares
2. buy and sell with other investors
3. share price determined by NAV and supply/demand
4. no advertising
Mutual fund funds and fees (4)
1. Load funds
2. No load funds
3. Hidden load funds
4. Management fee
Load funds (definition and 4 payment types)
mutual funds that charge a commission (<1%)
1. Front End = pay commission when you pruchase
2. Back End = pay commission when you sell
3. Level Load = pay commission annually
4. Low Load = discounted commission
No load funds
mutual funds that do not charge a commission (<0.25%)
Hidden load funds
12b-1 special fees for marketing and advertising (distribution)
Management fee
annual fee to fund's money manager
Classes of shares (3)
1. Class A = front end costs and fees
2. Class B = back end costs and fees
3. Class C = level load
, Mutual fund services (4)
1. Automatic investment (bank account/paycheck)
2. Automatic reinvestment (dividends/capital gains)
3. Systematic withdrawal (retirement checks)
4. Exchange Privilege (switch funds within same family)
Family of mutual funds
All the different mutual funds offered by the same investment management
company
Unit Investment Trust
A trust is created and assembles an unmanaged portfolio of securities. Investor
can sell when they want at current market value.
REIT (open/closed end, what they do, dividend payments, 3 types)
Real Estate Investment Trust:
closed end, uses stock proceeds to purchase real estate and mortgages, pays
90% of profits as dividends
1. Property REIT invest in commercial property
2. Mortgage REIT invest in mortgages
3. Hybrid REIT invest in both
Derivatives (definition and 2 types)
An investment that derives its value from the price change of another
investment
1. Futures
2. Options
Futures (definition, commission, expire when, what % lose money)
Contracts that provide for the later delivery of an actual commodity. In the
contract, the seller agrees to deliver the commodity and buyer agrees to accept
it. Both are locked in.
1. commissions may go up to 20% of down payment
Version with Reliable Answers from Verified
Study Resources / Already Graded A+
What are mutual funds
1. pool money from multiple investors
2. invest money based on fund objectives
Why mutual funds? (4 benefits)
1. diversification
2. professional management
3. smaller investment
4. easy
3 sources to find good mutual fund
1. Morningstar
2. Moody's
3. Financial publications
Open end mutual funds (majority) (# of shares, how you purchase, do what with
shares)
1. sell unlimited shares
2. purchase through agent
3. mutual fund will buy back shares
NAV
Net Asset Value = [(market value of owned securities)-(loans)] / [number of
shares]
,Closed end mutual fund (minority) (# of shares, how they trade, share price
determined how, advertising?)
1. sell limited shares
2. buy and sell with other investors
3. share price determined by NAV and supply/demand
4. no advertising
Mutual fund funds and fees (4)
1. Load funds
2. No load funds
3. Hidden load funds
4. Management fee
Load funds (definition and 4 payment types)
mutual funds that charge a commission (<1%)
1. Front End = pay commission when you pruchase
2. Back End = pay commission when you sell
3. Level Load = pay commission annually
4. Low Load = discounted commission
No load funds
mutual funds that do not charge a commission (<0.25%)
Hidden load funds
12b-1 special fees for marketing and advertising (distribution)
Management fee
annual fee to fund's money manager
Classes of shares (3)
1. Class A = front end costs and fees
2. Class B = back end costs and fees
3. Class C = level load
, Mutual fund services (4)
1. Automatic investment (bank account/paycheck)
2. Automatic reinvestment (dividends/capital gains)
3. Systematic withdrawal (retirement checks)
4. Exchange Privilege (switch funds within same family)
Family of mutual funds
All the different mutual funds offered by the same investment management
company
Unit Investment Trust
A trust is created and assembles an unmanaged portfolio of securities. Investor
can sell when they want at current market value.
REIT (open/closed end, what they do, dividend payments, 3 types)
Real Estate Investment Trust:
closed end, uses stock proceeds to purchase real estate and mortgages, pays
90% of profits as dividends
1. Property REIT invest in commercial property
2. Mortgage REIT invest in mortgages
3. Hybrid REIT invest in both
Derivatives (definition and 2 types)
An investment that derives its value from the price change of another
investment
1. Futures
2. Options
Futures (definition, commission, expire when, what % lose money)
Contracts that provide for the later delivery of an actual commodity. In the
contract, the seller agrees to deliver the commodity and buyer agrees to accept
it. Both are locked in.
1. commissions may go up to 20% of down payment
