FI 413 Lecture Notes - Lecture 17: Transaction Processing, Embezzlement, Turnover Tax
Document Summary
Readings: pages 164-177 in the course pack http://www. wsj. com/articles/the-dying-business-of-picking-stocks-1476714749. Investment companies not insured, won"t know return, riskier than bank account. Pool money from multiple investors and buy stocks, bonds, money-market instruments and other securities with proceeds. Shareholders indirectly own the assets held by the investment company. The returns to investment company shareholders are not guaranteed but are equal to the returns of the of the assets held within the investment company less various fees and expenses. Mutual funds key feature: you can go to the fund at the end of each day and ask for redemption for fair value. Closed-end funds have to sell shares to someone else to get money back, need brokerage account. Exchange-traded funds (etfs) different from closed: institution investors are able to buy or redeem shares purchase of shares with something of the same type. Mutual fund organization good business to be in, high switching costs and taxes. Fund sponsor in charge of the investment.
