No. of Recommendations: 0
Exactly how mutual funds leverage is over my head....

At least in some cases, closed-ends leverage themselves by issuing preferred stock in a separate issue, often privately placed. Preferred shareholders get a fixed interest rate back. The fund then uses the proceeds from the preferred issue to buy additional assets whose values are included in the net asset value of the common shares. Because the obligation to the preferred shareholders stays constant, the common gets the more volatile price movements from the leveraged assets.

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.