Glossary | M
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Maloney Act Of 1938: This Act, which was an amendment to the Securities Exchange Act of 1934, provides for the regulation of the over-the-counter market through National Securities Associations registered with the SEC.
Management: Officers of the corporation that serve at the pleasure of the Board of Directors.
Management Company: Daily administration of a mutual fund is handled by the management company, which is usually the same firm that sponsored the fund. The management company also typically serves as the investment advisor, selecting and managing the securities held in each fund portfolio pursuant to a separate management agreement.
Management Fee: Amount paid by a mutual fund company from its assets to an investment advisor/administrator.
Margin: Amount payable by the client when he or she uses their broker's credit to buy a security.
Market Price: Last reported price at which a stock or bond was sold.
Market Risk: The value of a security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They also may decline because of factors that affect a particular industry.
Market Sector Risk: A fund's overall risk level will depend on the market sectors in which the fund is invested and the current interest rate, liquidity and credit quality of such sectors. The fund may overweight or underweight certain industries or market sectors, which may cause the fund's performance to be more or less sensitive to developments affecting those sectors.
Market Value: Value of an asset based on the price it would command on the open market.
Maturity: The date on which a debt becomes due for payment. A bond due to mature on January 1, 2010, will return the bondholder's principal and final interest payment when it reaches maturity on that date. Bond yields are frequently calculated on a yield-to-maturity basis. See also Average Effective Maturity.
Member Bank: Bank that is a member of the Federal Reserve System.
Member Firm: Any broker or dealer who is a member of a national securities exchange.
Mill Rate: This is the physical amount of money per share earned in dividends in one business day. The mill rate is used in the 1-day yield calculation.
Minimum Purchase Requirement: Lowest dollar amount required by certain mutual funds for the purchase of fund shares. Different amounts may apply for initial and subsequent purchases.
Minor: Person who is under the general age of majority. According to state laws, the age is either 18 or 21.
Monetary Policy: Is set by the Federal Reserve Board (FRB). Although the Federal Reserve Board has many tools available to it, they all have the effect of either tightening or easing the money supply.
Money Market Fund: Kind of mutual fund which seeks to maintain a stable $1 share price pursuant to Rule 2a-7 under the Investment Company Act of 1940. An investment in a money market fund is neither insured nor guaranteed by the U.S. Government and there can be no assurance that a money market fund will be able to maintain a stable $1 share price.
Money Market Obligation: Short-term debt instrument issued by a corporation, government or municipality to raise funds for short-term financing needs.
Monthly Yield: Represents the dividend factor divided by the number of days in the calendar month, is annualized and converted to a percent.
Moody's Investor Services: Well-known U.S. debt rating agency that rates short- and long-term debt issues based on its opinion of the ability of the issuer to punctually repay its debt obligations.
Morningstar Inc.: Research and publishing firm which provides mutual fund data, analysis and overall framework for assessing mutual funds. Morningstar reports are targeted to the mutual fund investor to assist him in making an informed investment choice. Morningstar also rates funds with a 1 to 5 star system based on a measured risk/reward assessment. Morningstar ratings are not performance rankings, but have become a leading data source for the mutual fund investor.
Mortgage-backed Funds: Invest primarily in securities backed by mortgages. Examples of these securities may include GNMAs, FNMAs, Freddie Macs, CMOs and ARMs. These funds provide investors with fully taxable monthly income that is generated from the mortgage-related securities.
Mortgage Bond: Bond issue secured by a mortgage on the issuer's property.
Mortgage-backed Securities: Portfolios of mortgages assembled by a master service who collects monthly principal and interest payments on homeowner mortgages.
Multiple Class Offerings: Flexible pricing allows the investor to choose between different fee structures such as Class A and Class B shares.
Municipal Bond: Securities issued by state or local governments and their agencies and instrumentalities. Income is exempt from federal taxes, and possibly, some or all from state and local taxes. Also known as Tax-Exempt Bond.
Municipal Bond Funds: Invest in debt obligations of state and local governments and their agencies and instrumentalities.
Municipal Bond Insurance: Policies underwritten by private insurers guaranteeing municipal bond principal repayments in the event of default.
Mutual Fund: Group of shares consisting of different securities that are managed by an investment company.
Mutual Fund Custodian: Commercial bank or trust company that physically holds the securities owned by a mutual fund company. It may also act as a transfer agent. Also known as Processing Bank.