Chapter g Investment Companies
Chapter 9 Investment Companies
Chapter y Investment Companies INvestment companies Investment companies are a type of financial intermediary, they obtain money from investors and use it to purchase financial assets. In return the investor receive certain rights regarding the financial assets that the investment company has invested and any earnings that it may generate In the simplest and most common situation, the investment company has only one type of investor stockholders
Chapter 9 Investment Companies Investment companies – Investment companies are a type of financial intermediary, they obtain money from investors and use it to purchase financial assets. – In return the investor receive certain rights regarding the financial assets that the investment company has invested and any earnings that it may generate. – In the simplest and most common situation, the investment company has only one type of investor— stockholders
Chapter y Investment Companies For an individual there are two advantages to investing in such company instead of investing directly in the financial assets that these companies own. One is economies of scale(portfolio) and the other is professional management(specia list VNet asset value (NAv) An important concept in understanding how investment company operates is net asset lu
Chapter 9 Investment Companies – For an individual there are two advantages to investing in such company instead of investing directly in the financial assets that these companies own. One is economies of scale(portfolio) and the other is professional management(specialist ). Net asset value (NAV) – An important concept in understanding how investment company operates is net asset value
Chapter y Investment Companies If an investment company's NAv at the end of day t, it can be determined by the following equation: MVAt-liaBt NAT Where mavliab nsa denote the market value of the investment company's asset, the dollar amount of the investment company's liabilities and the number of shares the ic has outstanding at the day
Chapter 9 Investment Companies – If an investment company’s NAV at the end of day t, it can be determined by the following equation: – Where MAV,LIAB, NSA denote the market value of the investment company’s asset, the dollar amount of the investment company’s liabilities, and the number of shares the IC has outstanding at the day. t t t t NSO MVA LIAB NAV − =
Chapter y Investment Companies v Major types of investment companies Unit investment trust A unit investment trust is an investment company that owns a fixed set of securities for the life of the company, that is the investment company rarely alters the composition of its portfolio over the life of the company. Formation-to form a UIT, a sponsor( often brokerage firm) purchases a specific set of financial asset and deposits them with a trustee
Chapter 9 Investment Companies Major types of investment companies – Unit investment trust • A unit investment trust is an investment company that owns a fixed set of securities for the life of the company, that is the investment company rarely alters the composition of its portfolio over the life of the company. • Formation — to form a UIT, a sponsor( often brokerage firm) purchases a specific set of financial asset and deposits them with a trustee