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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Monty Lenard who wrote (16677)	10/4/1998 10:23:00 AM
From: John Hunt	Read Replies (1) \| Respond to of 18056

<< "with the balance redeemed in shares of securities selected by the fund." >> Yes, lots of latitude. You get to dump what they can't get rid of. :-)) John

To: Monty Lenard who wrote (16677)	10/4/1998 3:10:00 PM
From: Kip518	Read Replies (1) \| Respond to of 18056

Monty, I believe it works like this in the doomster's scenario: redemption in kind is the escape hatch that will be used by funds to redeem fund-holder's claims against them when markets become totally illiquid -- e.g. when market makers refuse to maintain markets. There are no guarantees that markets in any particular stock must be maintained. I'm not sure what would happen if a NYSE specialist refused to trade a stock, but in the case of the NASDAQ, MMs can participate or not as their choice. In an extreme market meltdown, MMs could just walk away from any stock and refuse to buy it. Without a market the stock would be marked to the last price. In theory, funds could "cash out" their fund holders with certificates of "frozen" stocks at that price. Clearly, a most frightening vision of the future. Kip