Use the five issues an investor should consider when purchasing stock to explain the popularity of mutual funds.
What will be an ideal response?
(1) Affordability, (2) liquidity, (3) diversification, (4) management, and (5) costs are the five issues that need to be considered, and mutual funds address these in one way or another. Many mutual funds can be opened with relatively small amounts, they usually allow for investors to sell their positions and withdraw their investment. Mutual funds are designed to provide more diversification than what most individual investors could hope to achieve on their own. Most are managed by professional managers and they provide different fees or costs for these management services.
You might also like to view...
Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 15 calzones would appear
A) along Tomaso's production possibilities frontier. B) inside Tomaso's production possibilities frontier. C) outside Tomaso's production possibilities frontier. D) at the horizontal intercept of Tomaso's production possibilities frontier.
A rise in Durable Goods Orders should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
Holding other things constant, an appreciation of the US Dollar relative to the Chinese Yuan causes the demand for the Yuan to _____________ and the supply for Yuan to __________
a. Increase; decrease b. Increase, increase c. Decrease; Increase d. Decrease; Decrease
The difference between the average earnings of eye surgeons and those of janitors is an example of
a. a temporary differential b. a permanent differential c. a resource price difference that will cause a reallocation of resources to different uses d. a temporary difference that will be eliminated through the reallocation of resources to different uses e. a differential caused by a lack of resource mobility