ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It is made up of a pool of funds collected from many investors
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It is managed by investors
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It is more risky than individual stocks and bonds
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It puts assets together into one sercurity
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Detailed explanation-1: -A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Mutual funds are regulated investment products offered to the public and available for daily trading.
Detailed explanation-2: -Explanation: Statement 1 is correct: A mutual fund collects money from investors and invests on their behalf. Mutual funds are considered an ideal investment avenue for regular investors who are less aware of investing surplus funds.
Detailed explanation-3: -A mutual fund is a professionally managed investment fund that accumulates money from many investors to purchase securities who may be retail or institutional in nature.
Detailed explanation-4: -Which of the following is TRUE for mutual funds and those who invest in them? Investors must be provided with specific information when purchasing mutual funds.
Detailed explanation-5: -The major difference between pooled funds and mutual funds is their legal status under securities law. Pooled funds are not “public” investments, which means investment and trading in pooled funds is restricted. Securities legislation defines the rules for a “public” security.