Expalin the term mutual funds, Financial Management

Assignment Help:

Mutual funds

Mutual funds pool resources from a lot of individuals and companies and invest these resources in diversified portfolios of bonds, stocks and money market instruments. An open-ended mutual fund the main type of mutual fund continuously permits shareholders to sell redeem outstanding shares and investors to buy new shares at any time. The worth of these shares is determined by the value of the mutual fund's holding assets. Two major advantages characterise mutual funds. First mutual funds offer opportunities to small investors to invest in financial securities and diversify risk. Second mutual funds obtain advantage of lower transaction costs when they buy larger blocks of financial securities. There are two sections in the mutual fund industry long-term funds as well as short-term funds. Long-term funds comprise bond funds the funds that contain fixed-income debt securities and equity funds the funds that contain stock securities and hybrid funds that contain both debt and stock securities. Short-term funds are represented by money market mutual funds, funds that contain various mixes of money market securities and partially allow shareholders to write cheques against the value of their holdings the presence of deposit-type accounts makes money market mutual funds to some extent similar to depository institutions.

In the USA mutual funds are the second most significant financial intermediary in terms of asset size. In fact they are larger in comparison of the insurance industry but smaller than the commercial bank industry. The mutual assets of the nation's mutual funds increased to $9.5 trillion in 2006 according to the Investment Company Institute's official survey of the mutual fund industry.

Activity 2.5

From the 2007 Investment Company detail Book formed by the Investment Company. Write a brief explanation of how you think these events have determined the historical trend of the industry as described in Table US Mutual Fund Industry Number of Funds, Total Net Assets, Number of Share Classes and Number of Shareholder Accounts (2010 Investment Company

569_Mutual funds.png

                                                                  Intermediated funds by type of financial intermediary

Summing up as displayed the total funds intermediated by US financial intermediaries are US$25.17 trillion in year 2006. Commercial banks account for the maximum proportion followed by insurance companies, mutual funds and S&Ls.


Related Discussions:- Expalin the term mutual funds

Steps in process of securitization, Process The process of Secu...

Process The process of Securitization involves the following steps: Transfer of assets by the originator (person holding the assets) to an entity (comp

Common-size statement value, A firm has sales of $6,500, net income of $500...

A firm has sales of $6,500, net income of $500, total assets of $12,000, and total equity of $700. Interest expense is $1000. What will be the common-size statement value of the in

Explain transaction exposure, How would you explain transaction exposure? H...

How would you explain transaction exposure? How is it different from economic exposure? Answer:Transaction exposure is the sensitivity of comprehend domestic currency values of

Collateralized mortgage obligations (cmos), Collateralized Mo...

Collateralized Mortgage Obligations (CMOs) CMOs retain many of the yield and credit quality advantages of pass-throughs, while eliminating some of the

What is the value of ast stock, Brandon Michael Chu of Henry Law & Yang Yi ...

Brandon Michael Chu of Henry Law & Yang Yi Capital Limited believes that earnings and dividends at Alua Amanova & Shuwen Wang Technologies (AST) will continue to grow at 12% per ye

Outline the objectives of alm, You are a member of the ALM Committee (ALCO)...

You are a member of the ALM Committee (ALCO) of ANZ Bank. A visiting member has some queries relating to the general framework of the ALM and interest rate risk impact on the incom

Cost-volume-profit models, Bennis Shafts produces three types of golf club ...

Bennis Shafts produces three types of golf club shafts which it sells to golf club manufacturers.  Prepare ONE worksheet to answer the following questions and to determine the outc

Put option, Put Option This is a right which is granted in exchange for...

Put Option This is a right which is granted in exchange for an agreed-upon sum to sell property. Options are mostly used frequently in securities transactions it also used stoc

Calculate the net investment of the firm, Problem: i) Assume a firm bu...

Problem: i) Assume a firm buys a new tooling machine for Rs 2000,000, installation costs net of taxes are Rs 300,000. An existing asset has a book value of Rs 400,000 and the

Walters model, A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U a...

A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U and fixed cost amount to Rs.1,70,000 it finances all its assets by equity funds. It pays 40% tax on its income. Z Ltd is

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd