Good-Faith Funds

Security deposit on new securities, ranging from 1% to 5% of the par amount, provided to the issuer at the time of a competitive bid by each underwriting syndicate. Also called good-faith check, if delivered as a check, or good-faith deposit.

Remarks: Bond funds including mutual funds (open-end and closed-end, actively managed and indexed), exchange-traded funds and unit investment trusts offer a convenient and affordable way to invest in a diversified portfolio of bonds, but a bond fund investment can differ from a bond investment in ways that are important to understand.