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FINANCIAL
INSTITUTIO
NS
OTHER LENDING
INSTITUTIONS
• Financial intermediaries that invest the funds of individual investors in securities or other assets.
• Three main types of Investment Companies • Open-end Investment company • Closed-end Investment
company • Unit Investment Trust
• Open-end Investment Company • Sell shares to investors. When the investors want to sell their shares,
the Mutual Fund will repurchases the shares at the NAV. (Funds Grow and Shrink)
• Closed-end Investment Company • Shares more closely resemble stocks in the way that they are traded.
• They raise money only once. The shares are traded on an exchange (like NYSE). • Price of the shares are
influenced by supply and demand AND changes in the value of the holdings (Stocks and Bonds). • Shares
prices may be different than the NAV.
• Unit Investment Trust • Money invested in a portfolio that is fixed for the life of the fund. • Typically a
broker buys a portfolio of securities which are deposited into the trust. It then sells shares or units in the
trust called, redeemable trust certificates. • Most unit trusts hold fixed-income securities and their unit
expires at maturity • Shares or “units” of redeemable trust certificates are sold by the trust • Investors
can sell their shares back to the trustee
PENSION FUNDS