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Level 77

Exchange Traded Funds


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diversification
investing in a portfolio whose returns do not always move together with the result that overall risk is lower than for individual assets ( You shouldn't put all your eggs in one basket)
reinvesting
earnings from mutual fund account automatically buys more shares of the fund.
dollar cost averaging
The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.
Prospectus
is a document that discloses information about a company's earnings, assets, liabilities, products and services, stocks, and qualifications of its management.
net asset value
the daily value of a mutual find that includes all the assets minus the fund's liabilites converted to per-share price
closed-end mutual fund
fund that trades on stock exchanges like common stocks
open-ended mutual funds
Simply issue new shares when someone wants to buy into the fund, rather than matching an existing share holder when someone wants to see.
captial gains
result when an asset is sold for a profit. in this case, an asset may be a stock, bond, or a fixed income security
actively managed mutual funds
open-ended funs that employ a portfolio manager who buys and sells stocks and bonds in an attempt tp post a better return than the market
passivley managed funds
include index funds where managers buy stocks or bonds that match the composition of popular stock and bond indexes, such as the S&P 500 and the Dow Jones Industrial Average
market capitalization
number of shares issued by listed corporations multiplied by current share prices
perferred stocks
a special type of stock that companies issue. they have limited rights when it comes to voting on company business, but they do pay a steady dividend and that's what attracts investors
stocks-to-bonds ratio
the percentage of your portfolio occupied by stocks and bonds
tax-free money market funds
invest in securities that generate tax-free income
actively managed fund
manager belives in beating the market through careful stock selection and bargian hunting
passively managed fund
relies on the natural returns of the underlying index and doesn't tinker with the established sysytem
stock screeners
are online tools that investors use to narroe down possible investment candidates
the S&P 500 Index
is made up of 599 of the leading companies in their markets, it is dominated by large companies
total return
of an investment in a mutual fund includes any dividents, capital gains distributions, and interest income
American Stock Exchange
is one of the three major national exchanges, although it doesn't get as much attention from the general public as the New York Stock Exchange or the Nasdaq
core holding
a mutual funs or exchage traded fund that is broad based and centeral to an investor's investment strategy