To determine:
Which amongst the two fixed income unit investment trust or open end fixed income mutual fund will have less operating expense?
Introduction:
A Unit Investment trust refers to the investment company which provide fixed portfolio that comprises of bonds and stock in the form of redeemable units for a particular time period to its investor. This helps an investor to earn dividend income and capital appreciation. Mutual fund refers to the investment policy under which the funds are pooled from the investor and same is invested in different securities such as debentures, bonds and stocks. Mutual funds are advantageous for the small investor as it provides leverage to make investments in small amounts.
Answer to Problem 1PS
Fixed income unit investment trust must have lesser expense associated with operation when compared with open end fixed income mutual fund.
Explanation of Solution
In this situation, once the trust is established the investment trust portfolio is fixed. There is no need to incur any expenses for the
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