Alright, I've put it off long enough, so here is my lesson (yeah, it's boring but get over it).
Most of you probably have 401K's through your jobs, or you have money invested in mutual funds. Every morning when you open the newspaper you can check the price (or Net Asset Value per share) of your investments. Okay, so what's the point....well how your money converts from what is deducted from your check, to the value that gets posted in the newspaper is what I do for a living. Allow me to walk you through the daily process of your money.
Every morning my groups first task is to calculate the net cash available for each mutual fund and provide that information to our traders. To devise the cash amount we add up the prior day ending value of the fund, we add in any security maturities, dividends, interest payments received, and net fundshare (FS subscriptions are money paid into the fund, and FS redemptions are money withdrawn from the fund by the investor.) After this figure is provided to the trader they take that money and make trades. They then relay those trades to us, and we process them on the accounting system, and set up all related dividend and interest accruals, any amortization(decrease/increase project for the security spread out over time). We also process any fundshare transactions that occur during the day on the fund. As 3:30 PM CST approaches we begin the process of valuing the funds. We derive the daily closes prices for all equity securities (stocks), all bonds, and commodities (futures, options, swaps, etc.) from our multiple market feeds, or from pricing vendors available to us. We also apply the daily closed currency exchange rates to foreign holdings, and we begin our calculation process. The formula looks easy for pricing (par of the securities x closing price x exchange rate all added together and then divided by the total number of outstanding shares of the fund). After the calculations are complete we have until 5:00 PM CST to send our NAV's to Nasdaq so they can publish them in the paper for you to see.
Now if you mix the above process with breakfast and lunch, a couple of trips to the bathroom, a few dozen stops on CP, and some general jacking around, that is my work day. So the next time you look at your paycheck and see your 401K deduction, just know there is a good chance that money will pass across my desk. Makes sticking it under the mattress not seem like such a bad idea huh?
:whistling:
