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Part: 5 Here's Our Advice > Glossary - Pg. 291

Glossary 291 low-load fund A mutual fund with a sales charge ranging from 1 percent to 3 percent of the net amount invested by a shareholder. These mutual funds are generally sold by no-load fund families. Low-load funds gained popularity in the mid-1980s, a period that witnessed renewed public interest in investment companies of all types. lump-sum distribution With retirement plans, the disbursement of an individual's benefits in a single payment. A lump- sum distribution has important income tax implications; hence, the individual must investigate this option thoroughly before choosing a single payment. management fee The money paid to a manager(s) for investment decisions. The fee is generally based on a percentage of the net asset value of the fund, with the percentage becoming smaller as the fund's assets grow larger. Fees vary considerably among firms but average about 0.25 to one percent of assets. A fund is required to list management fees (and all other expenses) in its prospectus. margin buying The act of financing the purchase of securities partly with money borrowed from the brokerage firm. Regulations permit buying up to 50 percent on margin, meaning that an investor can borrow up to half the purchase price of an investment. market capitalization A measure of how large a company is. It is calculated by multiplying the market price per share times the total number of shares outstanding. For example, at a current price of $10 for each of its 15 million shares of outstanding stock, MegaCorp has a market capitalization of $10 times 15 million, or $150 million. market risk