FIN 4504 Lecture Notes - Lecture 5: Net Asset Value, Money Market Fund, Investment Company
14 Sep 2016
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Access to more assets and reduced risk. A financial intermediary that invests the funds of individual investors in securities or other assets. Main disadvantage: frees can be pretty high. Individual investors need to know what their portion of the company is worth. The value of each share is called net asset value (nav) > needed if you want to invest with a company. Net asset value (nav): assets minus liabilities per share. > nav = market value of assets liabilities / shares outstanding. A mutual fund that manages a portfolio of securities worth m. m to its investment advisors and owes another m for rent, wages due, and miscellaneous expenses. > nav = m - m / 5m = per share. These are the main two, and managed or not is the main difference. > money pooled from many investors is invested in portfolio fixed for life of fund: unmanaged.
