Chapter 6.3, Problem 5R

To determine

To evaluate: If an individual has $15,000 of funds to invest, the type of funds or investment that should be chosen.

Explanation of Solution

If someone has $15,000 of funds to invest, the type of funds or investment that should be chosen is:

1. Mutual Funds: A kind of organization of finance that comprises of a collection of money gathered by many investors to invest in securities like bonds , stocks, money market instruments and other assets is considered a mutual fund. Mutual funds are managed by trained portfolio managers, who distribute the assets of funds and aim to make capital gains or dividends for the fund's investors. A portfolio of mutual fund is designed and controlled to meet the investment objectives set out in its prospectus.
2. Stocks: Stocks are the financial assets that the companies normally have to raise the money from the general public. It entitles the shareholder to a percentage of the company's assets and income equal to how much stock they own. Stock units are called "shares," because the investment can be useful.

Economics Concept Introduction

Introduction: Banking can be defined as taking and safeguarding capital held by other individuals and organizations, and then lending it out to earn a profit. Nonetheless, with the passage of time, the activities covered by the banking sector have increased and banks now also provide various other services.