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Stock market basics

Mutual fund

Defined in 2 lessons · Updated October 17, 2026

Definition

An open-end fund that sells and redeems its own shares at the next NAV calculated after your order, usually once each business day.

Example

Suppose you place an order to buy $5,000 of a mutual fund at 11:00 a.m., when yesterday’s NAV was $40.00. You do not buy at $40.00: the order fills at the NAV calculated after today’s close, say $40.50, which gives you about 123.46 shares. An order placed after the fund’s daily cutoff would get the next business day’s NAV instead.

Hypothetical numbers, for illustration only.

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On the left, a big box labeled single stock holding one coloured block; on the right, a basket labeled ETF / index fund holding many small blocks, with the note “one share = a slice of many companies”.

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