Question

• What is the rationale behind the mutual fund investment
• Annalise the relationship between risk and return
• Duration and its importance
• Define the most important asset classes and analyze them, outline the main differences
• Introduce the option transactions (purpose, types of options, payoff chats)
• Bond valuation methods
• Introduce the EMH theory and its different layers
• Ratio analysis as a valuation method (advantages/limitations)Order types and its purpose

Answer 1

1. The rationale behind mutual fund investment is to maximize the overall rate of return by minimising overall risk and transfer the management of the portfolio into the hands of the experts in exchange for a commission.

mutual fund investments are made by investors who are looking for generating a larger rate of return but they do not want to manage their own portfolio because they do not have that much knowledge about the financial markets so they want professional to manage their portfolio in order to maximize the rate of return by minimising their overall risk.