A). A mutual fund is a kind of Investment vehicle in which money is collected from a large number of small investors and invested in stocks, bond, debenture according to the fund mandate. The fund manager manages the mutual fund for that he is paid a certain percenatge of fee from the fun itself. Mutual fund is an asset management financial institution. A financial institution is a place where financial activities are performed. Mutual funds do fall in the category of asset management institution.
B) For Individual investor, mutual funds are the most popular investment category. They are poupular because of a number of reasons:
C) Close end funds and open ended funds majorly operate in the same way, except for few differences in their share distribution and the way share are created.
The way exchange traded funds differ from the open end funds is the ETFs are a type of closed end funds. ETFs acts as investment vehicle which tries to replicate the performance of an Index. For example SPY is an exchange traded fund which replicates the performance of the INDEX S&P 500. Open end funds generally do not do that. Mutual funds simply tries to manage the fund according to the fund mandate and generate returns for theInvestors whereas ETF tries to generate a return which is in line with the Index performance being replicated.
D) Hedge fund is a kind of Investment vehicle which pools large amount of money from small group of high net worth Individuals and manage the funds. The hedge funds are type of actively managed funds which uses complex investment methods to determine Investment and generate excess return over the market. They are high risk and high reward kind of Investment.
Hedge funds differ from mutual funds in significant number of ways. Mutual funds are heavily regulated whereas hedge funds are not that much regulated.Most retail Investor prefer to Invest in mutual funds but high net worth investor choose to go with hedge funds. Most mutual funds are passive managed funds but almost all hedge funds are actively managed funds. Hedge funds use complex investment methods where as it is very rare for mutual funds to get into derivatives, short selling, arbitarge e.t.c
QUESTION 5 a) What is a mutual fund? In what sense is it a financial institution?...
The most significant difference between an exchange traded fund and an open end mutual fund is that a. The net asset value (NAV) of exchange traded funds is higher than the NAV of open end mutual funds. b. An investor can divest himself of his exchang traded fund shares by selling them to another investor, but an investor can only sell his open end mutual fund shares back to the mutual fund c. Exchange traded funds do not have to...
An investor purchases a mutual fund share for $100. The fund pays dividends of $6, distributes a capital gain of $7, and charges a fee of $5 when the fund is sold one year later for $105. What is the net rate of return from this investment? (Round your answer to the nearest whole number.) An investor purchases a mutual fund share for $100. The fund pays dividends of $6, distributes a capital gain of $7, and charges a fee...
What is the difference between an open-end mutual fund and an ETF closed-end? What the difference between open-end mutual fund and a unit investment trust?
Exchange Traded Funds ETFs 1. Define the following terms: a. spiders b. mutual fund c. net asset value d. counterparty risk 2. What is meant by financial innovation? Identify and explain the main forces that motivate the search for financial innovations. 3. What are exchange-traded funds (EFTs)? a. What was the first ETF? b. What was the first example of an ETF innovated in the United States? 4. How does a closed-end mutual fund differ from an open-end fund? a....
Define the following terms : spiders mutual fund net asset value counterparty risk What is meant by financial innovation? Identify and explain the main forces that motivate the search for financial innovations. What are exchange-traded funds (EFTs)? What was the first ETF? What was the first example of an ETF innovated in the United States? How does a closed-end mutual fund differ from an open-end fund? What advantages and disadvantages does each type of mutual fund have? What advantages of...
An investor purchases a mutual fund for $50. The fund pays dividends of $2.30, distributes a capital gain of $2, and charges a fee of $2 when the fund is sold one year later for $52.70. What is the net rate of return from this investment?
An investor purchases a mutual fund for $30. The fund pays dividends of $.60, distributes a capital gain of $5, and charges a fee of $5 when the fund is sold one year later for $32.40. What is the net rate of return from this investment? (Enter your answer to the nearest whole number.)
An investor purchases a mutual fund for $75. The fund pays dividends of $1.80, distributes a capital gain of $3, and charges a fee of $3 when the fund is sold one year later for $82.20. What is the net rate of return from this investment? (Enter your answer to the nearest whole number.) Rate of return %
one primary difference between and exchange trade fund (EFT) and a mutual fund is : a. you can't buy puts and calls for an ETF b. you can buy one share of an ETF whereas you have a minimum investment in most mutual funds c. You can trade the EFT during the day whereas mutual funds are settled at the end of the trading day d. b) and c)
Please explain in details 1 2 3 An investor has an initial margin requirement of 50% on his margin account and a maintenance margin requirement of 25%. The investor short sold 1,000 shares at $ 40 per share. What is the maximum price that the share can reach in the market before the investor receives a margin call? The difference between mutual funds and hedge funds is There is no difference since there are both managed portfolios Hedge funds are...