2.13 Mutual Funds Fundamentals
Open-end mutual funds pool investor capital into professionally managed portfolios with continuous liquidity at forward-calculated net asset values.
Key FINRA Exam Takeaways
- Open-end management companies with continuous primary offerings of common shares.
- Redeemable securities: Bought from and redeemed with the fund sponsor at forward NAV; no secondary exchange trading.
- Forward Pricing: Orders execute at the NEXT calculated Net Asset Value (typically 4:00 PM ET).
- NAV = (Total Assets - Liabilities) ÷ Total Outstanding Shares.
- Prospectus Delivery: Must deliver statutory prospectus or summary prospectus at or before trade settlement.
Interactive Knowledge Checkpoint • Section 2.13
Under SEC forward pricing rules, an investor who submits an order to purchase open-end mutual fund shares at 1:00 PM ET on Tuesday will receive what execution price?