ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Key Takeaways. An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Equities (e.g., stocks), fixed income (e.g., bonds), cash and cash equivalents, real estate, commodities, and currencies are common examples of asset classes.

Detailed explanation-2: -Mutual fund: An investment vehicle that allows you to invest your money in a professionally-managed portfolio of assets that, depending on the specific fund, could contain a variety of stocks, bonds, or other investments.

Detailed explanation-3: -The biggest similarity between stocks and bonds is that both of them are financial securities sold to investors to raise money. With stocks, the company sells a part of itself in exchange for cash. With bonds, the entity gets a loan from the investor and pays it back with interest.

Detailed explanation-4: -Sector-A group of similar securities, such as equities in a specific industry. Sector breakdown-Breakdown of securities in a portfolio by industry categories. Securities-Another name for investments such as stocks or bonds.

Detailed explanation-5: -An index fund is a portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index. Index funds have lower expenses and fees than actively managed funds. Index funds follow a passive investment strategy.