Mutual Funds are also called Open End Funds. Open Ended funds trading hours are open once the trading exchange is but when shares are bought, the price you pay will be decided at the end of the trading day. Stock trades are completed at any time during the day.
This subject is tested on the Series 6 and Series 7 exam. For those taking these licensing tests, you need to study this section. Percentage wise, there are more questions on the Series 6 than the Series 7.
Mutual Funds trade like this because you are basically buying new shares. The exception would be Exchange Traded Funds or ETF's and closed end funds which do trade during the day.
Stock Market Hours and Funds
Once the stock market opens, shares are traded and the investor will pay a commission on the trade, whether it is a buy or a sell.
Mutual funds that have blue chip stocks, penny stocks, bonds or a mix in their portfolio is still considered an open end fund and the price will not be set until all the securities have settled their value at the end of the day. There are also other price consideration issues such as:
Sales Charge - what the fund charges to buy or perhaps when sold. There are also no-load funds where a sales fee is not charged.
Redemption Fee - Some open end mutual funds will charge a fee to redeem the shares of the fund. Many times this fee is in place when the buying sales charge is low or there is no sales charge going in.
Expenses and the fact that the prices are set at the end of the trading hour day make open ended funds poor choices for active or day trading. Exchange traded - ETF's or closed end funds trade as the day goes and completed with "at the market" prices at the time of buying and selling. There are many choices of mutual funds in all sectors but they do not trade like a stock.
For the Series 6 exam and Series 7 Exam - those looking to become brokers and advisers
You will get a percentage of questions on mutual funds, Net Asset Value (the value per share), the Public Offering Price, Calculating sales charge and more. The Series 6 will have the greater percentage because you cannot sell stocks with a Series 6. You need a Series 7 License.
Other terms related to mutual funds:
Trading
Day Trader Fund
Mutual Funds Penny Stocks
When Do Funds Trade
Fractional Shares
Stock Market Funds
TAKE A SERIES 7 VIRTUAL CLASS
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