Every mutual fund has a stated investment objective. Disclosure of the investment objective is required by the SEC, and is used to classify a mutual fund into one of several categories
Briefly explain the investment objective of each of the following categories.
(a) growth funds
(b) aggressive growth funds
(c) equity-income funds
(d) balanced funds
What will be an ideal response?
Answer:
(a) Growth funds seek capital appreciation through long-term growth and capital gains. They offer little, if any, current income.
(b) Aggressive growth funds seek capital gains and are considered speculative in nature.
(c) Equity-income funds seek current income by investing in high-yielding common stocks. Capital preservation is a secondary objective.
(d) Balanced funds hold a portfolio of both stocks and bonds for the purpose of generating both current income and long-term capital gains.
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A. 14 years from the date of the filing of the application with the U.S. Patent and Trademark Office. B. 20 years from the date of the approval of the application granted by the U.S. Patent and Trademark Office. C. 14 years from the date of the approval of the application granted by the U.S. Patent and Trademark Office. D. 20 years from the date of the filing of the application with the U.S. Patent and Trademark Office.
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Answer the following statement true (T) or false (F)
You won the lottery and can receive either 1. $60,000 today, or 2. $10,000 one year from today
plus $25,000 two years from today plus $35,000 three years from today. You plan to use the money to pay for your child's college education in 15 years. You should A) take option two because you get $70,000 rather than $60,000 regardless of current interest rates. B) take the $60,000 today because of the time value of money regardless of current interest rates. C) take the $60,000 today if you can earn 6.81% per year or more on your investments. D) take the $60,000 today only if the current interest rate is at least 16.67%.
What is the present value of $2,000 to be received in six years if interest rates are 8% compounded semiannually? (Round to the nearest whole dollar)
A) $1,258 B) $1,249 C) $1,852 D) $1,158 E) $1,923