Two major reasons for which investor purchase mutual fund. Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Question

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Answer 1

Question

Chapter 16, Problem 16.1PQ1

Summary Introduction

To determine:

Two major reasons for which investor purchase mutual fund.

Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Expert Solution & Answer

Answer to Problem 16.1PQ1

Solution:

Professional management and diversification are the two major reasons for which the investors purchase mutual funds.

Explanation of Solution

Two major reasons for which investor purchase mutual fund are,

Professional management: When someone buys a mutual fund, professional expertise comes along with it. It means that whenever someone invests in mutual fund it directly does not get invested in securities. Instead, it goes to fund manager who then invests it after analyzing different alternatives with customer requirements in mind.
Diversification: Diversification means buying different kinds of security for a portfolio to reduce risk. Mutual fund has better capacity to diversify an individual portfolio as compare to an individual itself. If a person wants to diversify his portfolio himself he has to invest in at least one security of different kinds but with mutual fund a person can buy in percentage of one security which will provide diversification even in smaller amount of investments which normally does not available to investors.

Hence, professional management and diversification are the two major reasons.

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Students have asked these similar questions

A. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $200,000 for 20 years? Assume that the annuity will earn 10 percent per year.B. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year.C. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of five years. I need help solving question C on a financial calculator.

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It is now January 1. You plan to make a total of 5 deposits of $500 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 14% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. Round your answers to the nearest cent. 1. How much will be in your account after 10 years? 2. You must make a payment of $1,280.02 in 10 years. To get the money for this payment, you will make five equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 14% with quarterly compounding. How large must each of the five payments be?

Answer 2

Question

Chapter 16, Problem 16.1PQ1

Summary Introduction

To determine:

Two major reasons for which investor purchase mutual fund.

Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Expert Solution & Answer

Answer to Problem 16.1PQ1

Solution:

Professional management and diversification are the two major reasons for which the investors purchase mutual funds.

Explanation of Solution

Two major reasons for which investor purchase mutual fund are,

Professional management: When someone buys a mutual fund, professional expertise comes along with it. It means that whenever someone invests in mutual fund it directly does not get invested in securities. Instead, it goes to fund manager who then invests it after analyzing different alternatives with customer requirements in mind.
Diversification: Diversification means buying different kinds of security for a portfolio to reduce risk. Mutual fund has better capacity to diversify an individual portfolio as compare to an individual itself. If a person wants to diversify his portfolio himself he has to invest in at least one security of different kinds but with mutual fund a person can buy in percentage of one security which will provide diversification even in smaller amount of investments which normally does not available to investors.

Hence, professional management and diversification are the two major reasons.

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Answer 3

Question

Chapter 16, Problem 16.1PQ1

Summary Introduction

To determine:

Two major reasons for which investor purchase mutual fund.

Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Expert Solution & Answer

Answer to Problem 16.1PQ1

Solution:

Professional management and diversification are the two major reasons for which the investors purchase mutual funds.

Explanation of Solution

Two major reasons for which investor purchase mutual fund are,

Professional management: When someone buys a mutual fund, professional expertise comes along with it. It means that whenever someone invests in mutual fund it directly does not get invested in securities. Instead, it goes to fund manager who then invests it after analyzing different alternatives with customer requirements in mind.
Diversification: Diversification means buying different kinds of security for a portfolio to reduce risk. Mutual fund has better capacity to diversify an individual portfolio as compare to an individual itself. If a person wants to diversify his portfolio himself he has to invest in at least one security of different kinds but with mutual fund a person can buy in percentage of one security which will provide diversification even in smaller amount of investments which normally does not available to investors.

Hence, professional management and diversification are the two major reasons.

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Answer 4

Question

Chapter 16, Problem 16.1PQ1

Summary Introduction

To determine:

Two major reasons for which investor purchase mutual fund.

Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Expert Solution & Answer

Answer to Problem 16.1PQ1

Solution:

Professional management and diversification are the two major reasons for which the investors purchase mutual funds.

Explanation of Solution

Two major reasons for which investor purchase mutual fund are,

Professional management: When someone buys a mutual fund, professional expertise comes along with it. It means that whenever someone invests in mutual fund it directly does not get invested in securities. Instead, it goes to fund manager who then invests it after analyzing different alternatives with customer requirements in mind.
Diversification: Diversification means buying different kinds of security for a portfolio to reduce risk. Mutual fund has better capacity to diversify an individual portfolio as compare to an individual itself. If a person wants to diversify his portfolio himself he has to invest in at least one security of different kinds but with mutual fund a person can buy in percentage of one security which will provide diversification even in smaller amount of investments which normally does not available to investors.

Hence, professional management and diversification are the two major reasons.

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Answer 5

Chapter 16, Problem 16.1PQ1

Summary Introduction

To determine:

Two major reasons for which investor purchase mutual fund.

Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Expert Solution & Answer

Answer to Problem 16.1PQ1

Solution:

Professional management and diversification are the two major reasons for which the investors purchase mutual funds.

Explanation of Solution

Two major reasons for which investor purchase mutual fund are,

Professional management: When someone buys a mutual fund, professional expertise comes along with it. It means that whenever someone invests in mutual fund it directly does not get invested in securities. Instead, it goes to fund manager who then invests it after analyzing different alternatives with customer requirements in mind.
Diversification: Diversification means buying different kinds of security for a portfolio to reduce risk. Mutual fund has better capacity to diversify an individual portfolio as compare to an individual itself. If a person wants to diversify his portfolio himself he has to invest in at least one security of different kinds but with mutual fund a person can buy in percentage of one security which will provide diversification even in smaller amount of investments which normally does not available to investors.

Hence, professional management and diversification are the two major reasons.

Answer 6

Chapter 16, Problem 16.1PQ1

Summary Introduction

To determine:

Two major reasons for which investor purchase mutual fund.

Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Expert Solution & Answer

Answer to Problem 16.1PQ1

Solution:

Professional management and diversification are the two major reasons for which the investors purchase mutual funds.

Explanation of Solution

Two major reasons for which investor purchase mutual fund are,

Professional management: When someone buys a mutual fund, professional expertise comes along with it. It means that whenever someone invests in mutual fund it directly does not get invested in securities. Instead, it goes to fund manager who then invests it after analyzing different alternatives with customer requirements in mind.
Diversification: Diversification means buying different kinds of security for a portfolio to reduce risk. Mutual fund has better capacity to diversify an individual portfolio as compare to an individual itself. If a person wants to diversify his portfolio himself he has to invest in at least one security of different kinds but with mutual fund a person can buy in percentage of one security which will provide diversification even in smaller amount of investments which normally does not available to investors.

Hence, professional management and diversification are the two major reasons.

Answer 7

Chapter 16, Problem 16.1PQ1

Summary Introduction

To determine:

Two major reasons for which investor purchase mutual fund.

Introduction: Mutual fund is a security which is issued by pooling money from investors with the sole motive of investing in different kind of securities. Mutual funds give chance to small investor to invest in security with professional expertise.

Answer 8

Expert Solution & Answer

Answer to Problem 16.1PQ1

Solution:

Professional management and diversification are the two major reasons for which the investors purchase mutual funds.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Two major reasons for which investor purchase mutual fund are,

Professional management: When someone buys a mutual fund, professional expertise comes along with it. It means that whenever someone invests in mutual fund it directly does not get invested in securities. Instead, it goes to fund manager who then invests it after analyzing different alternatives with customer requirements in mind.
Diversification: Diversification means buying different kinds of security for a portfolio to reduce risk. Mutual fund has better capacity to diversify an individual portfolio as compare to an individual itself. If a person wants to diversify his portfolio himself he has to invest in at least one security of different kinds but with mutual fund a person can buy in percentage of one security which will provide diversification even in smaller amount of investments which normally does not available to investors.

Hence, professional management and diversification are the two major reasons.

Answer 12

Ch. 16 - Prob. 16.1PQ1 Ch. 16 - Prob. 16.1PQ2 Ch. 16 - Prob. 16.1PQ3 Ch. 16 - Prob. 16.1PQ4 Ch. 16 - Prob. 16.1PQ5 Ch. 16 - Prob. 16.2PQ1 Ch. 16 - Prob. 16.2PQ2 Ch. 16 - Prob. 16.2PQ3 Ch. 16 - Prob. 16.3PQ1 Ch. 16 - Prob. 16.3PQ2

Answer to Problem 16.1PQ1

Explanation of Solution

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Chapter 16 Solutions