Redemption charge
The commission charged by a mutual fund when redeeming shares. For example, a 2% redemption charge (also called a "back end load") on the sale of shares valued at €1000 will result in payment of €980 (or 98% of the value) to the investor. This charge may decrease or be eliminated as shares are held for longer time periods. |
Similar financial terms
Redemption cushionThe percentage by which the conversion value of a convertible security exceeds the redemption price (strike price).
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a stated date. A limit is placed on the value of the shares the investor receives.
Optimal redemption provision
Provision of a bond indenture that governs the issuer's ability to call the bonds for redemption prior to their scheduled maturity date.
Mandatory redemption schedule
Schedule according to which sinking fund payments must be made.
Redemption Fee
A charge assessed against an invetor for redeeming shares or interests in a fund. Often this charge is used for early or premature withdrawals. This feature is more common for funds investing in illiquid securities or emerging market funds and annuity products.
Sales charge
The fee charged by a mutual fund when purchasing shares, usually payable as a commission to marketing agent, such as a financial advisor, who is thus compensated for his assistance to a purchaser. It represents the difference, if any, between the share purchase price and the share net asset value.
Noncash charge
A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow.
Contingent deferred sales charge (CDSC)
The formal name for the load of a back-end load fund.
Deferred charge
An expenditure treated as an asset that carries forward until it becomes pertinent to the business at hand, e.g., the underwriting fees on a corporate bond issue, which the corporation capitalizes as a deferred charge and then amortizes over the life of the bond issue.
