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Definition of Index fund
Investment fund designed to match the returns on a stockmarket index.
A portfolio that is managed so as to perfectly replicate the performance of the market portfolio.
Mutual funds that aim to track the performance of a specific stock or bond index. This process is also referred to as indexing and passive management.
index Portfolio Rebalancing Service (IPRS) is a comprehensive investment service that can help increase potential returns while reducing volatility. Several portfolios are available, each with its own strategic balance of index funds. IPRS maintains your personal asset allocation by monitoring and rebalancing your portfolio semi-annually.
For investment companies, the management fee and "other expenses,"
Also known as a trading index (TRIN)= (number of advancing issues)/ (number of declining
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
This is a fund that buys common stock, preferred stock and bonds. The same as a
The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means
The beta of a fund is determined as follows:
Designing a portfolio so that its performance will match the performance of some bond index.
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the
An investment company that sells shares like any other corporation and usually does not
The CPI, as it is called, measures the prices of consumer goods and services and is a
Interest rate associated with borrowing money.
Indicated yield represents return on a share of a mutual fund held over the past 12
The European, Australian, and Far East stock index, computed by Morgan Stanley.
Employee stock fund
A firm-sponsored program that enables employees to purchase shares of the firm's
Investment funds established for the support of institutions such as colleges, private
Also called indexing plus, an indexing strategy whose objective is to exceed or replicate
Non-interest bearing deposits held in reserve for depository institutions at their district Federal
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
Federal funds rate
This is the interest rate that banks with excess reserves at a Federal Reserve district bank
Forward Fed funds
Fed funds traded for future delivery.
Set of funds with different investment objectives offered by one management company. In many
Security analysis that seeks to detect misvalued securities by an analysis of the firm's
The product of a statistical model to predict the fundamental risk of a security using not
In the model for calculating fundamental beta, ratios in risk indexes other than
Debt maturing after more than one year.
The ratio of a pension plan's assets to its liabilities.
Related: interest rate risk
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
A mutual fund that can invest anywhere in the world, including the U.S.
A fund that may employ a variety of techniques to enhance returns, such as both buying and
High-coupon bond refunding
Refunding of a high-coupon bond with a new, lower coupon bond.
A mutual fund providing for liberal current income from investments.
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
An investment/trading strategy that exploits divergences between actual and theoretical
A model of stock returns using a market index such as the S&P 500 to represent common or
A call or put option based on a stock market index.
A stock index option issued by either a corporate or sovereign entity as part of a security
Bond whose payments are linked to an index, e.g. the consumer price index.
A passive instrument strategy consisting of the construction of a portfolio of stocks designed to
A mutual fund that can invest only outside the United States.
International Monetary Fund
An organization founded in 1944 to oversee exchange arrangements of
An index that uses the capital asset pricing model to determine whether a money manager
Liability funding strategies
Investment strategies that select assets so that cash flows will equal or exceed
A mutual fund with shares sold at a price including a large sales charge -- typically 4% to 8% of
Low-coupon bond refunding
Refunding of a low coupon bond with a new, higher coupon bond.
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
A bank is said to match fund a loan or other asset when it does so by buying (taking) a deposit of
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
Mutual funds are pools of money that are managed by an investment company. They offer
Mutual fund theorem
A result associated with the CAPM, asserting that investors will choose to invest their
Net advantage of refunding
The net present value of the savings from a refunding.
No load mutual fund
An open-end investment company, shares of which are sold without a sales charge.
A mutual fund that does not impose a sales commission. Related: load fund
Not permitted, under the terms of indenture, to be refundable.
Objective (mutual fund)
The fund's investment strategy category as stated in the prospectus. There are
Also called a mutual fund, an investment company that stands ready to sell new shares to the
Optimization approach to indexing
An approach to indexing which seeks to Optimize some objective, such
Overfunded pension plan
A pension plan that has a positive surplus (i.e., assets exceed liabilities).
Private Export Funding Corporation (PEFCO)
Company that mobilizes private capital for financing the
The present value of the future cash flows divided by the initial investment. Also called
Resembles a sinking fund except that money is used only to purchase bonds if they are selling
Eligible for refunding under the terms of indenture.
Also called a prerefunded bond, one that originally may have been issued as a general
The redemption of a bond with proceeds received from issuing lower-cost debt obligations
A mutual fund that invests in a specific geographical area overseas, such as Asia or Europe.
A fund accounting for all revenues from an enterprise financed by a municipal revenue bond.
Categories of risk used to calculate fundamental beta, including (1) market variability, (2)
Single country fund
A mutual fund that invests in individual countries outside the United States.
Single index model
A model of stock returns that decomposes influences on returns into a systematic factor,
Related: market model
Sinking fund requirement
A condition included in some corporate bond indentures that requires the issuer to
Stock index option
An option in which the underlying is a common stock index.
Stopping curve refunding rate
A refunding rate that falls on the stopping curve.
Stratified equity indexing
A method of constructing a replicating portfolio in which the stocks in the index
Stratified sampling approach to indexing
An approach in which the index is divided into cells, each
Stratified sampling bond indexing
A method of bond indexing that divides the index into cells, each cell
For a stock index option, the index value at which the buyer of the option can buy or sell the
Cash flow available after payment of taxes in the project.
Term Fed Funds
Fed funds sold for a period of time longer than overnight.
A measure of the excess return per unit of risk, where excess return is defined as the
Mutual funds that do not charge an upfront or back-end commission, but instead take out up to
Two-fund separation theorem
The theoretical result that all investors will hold a combination of the riskfree
Underfunded pension plan
A pension plan that has a negative surplus (i.e., liabilities exceed assets).
Debt maturing within one year (short-term debt). See: funded debt.
See cash value added.
The capital invested in a business by the shareholders, including retained profits.
A method for determining the profitability of an investment. It is
present value index
see profitability index
profitability index (Pl)
a ratio that compares the present value of net cash flows to the present value of the net investment
Analysts who attempt to find under- or overvalued securities by analyzing fundamental information, such as earnings, asset values, and business prospects.
Debt with more than 1 year remaining to maturity.
internally generated funds
Cash reinvested in the firm; depreciation plus earnings not paid out as dividends.
Measure of the investment performance of the overall market.
Ratio of net present value to initial investment.
fund established to retire debt before maturity.
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