Personal Finance
Personal Finance
7th Edition
ISBN: 9780134989969
Author: Madura, Jeff
Publisher: Pearson,
Question
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Chapter 17, Problem 1RQ
Summary Introduction

To discuss: Mutual funds and their types and their difference, and whether the investors chooses the securities the mutual funds are invested in.

Expert Solution & Answer
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Explanation of Solution

Mutual fund is where it collects the money from various investors and then invests it into a portfolio of securities.

Three are two types of mutual funds as follows:

  • Stock mutual funds
  • Bond mutual funds

Both bond and stock mutual funds issues shares. All these mutual funds are employed by the portfolio managers who makes decision on what to purchase. Thus, there is no need for investors to chooses the bonds or stocks on themselves.

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