Question

Select the correct answer.

Why might a mutual fund be a better investment than individual stocks and bonds?

A.

A mutual fund guarantees dividends.

B.

Stocks are more expensive.

C.

Risk is diversified with a mutual fund.

D.

Bonds carry less risk.

E.

Stockholders can pick the stocks for their mutual fund.

Answer #1

Why might a mutual fund be a better investment than individual stocks and bonds?

**Answer is : C. Risk is diversified with a mutual
fund.**

A mutual fund is taken care by professionals who select the assets for the mutual fund after due consideration to their risk, return , beta , systematic & non systematic risk. So when amutual funds uses various assets for the portfolio the risk gets diversfied away. and hence it is much safer than the indivividual stocks or bonds. Also people do not get to chose the individual stocks and bonds in mutual funds.

When buying a mutual fund, you might expect to earn money
through (future current income OR future
capital appreciation) __________________ (from dividends),
(future current income OR future capital
appreciation) __________________ (from increases in share
prices of the fund's underlying securities), or both. You can
calculate your total earnings from a given investment by
determining the approximate yield. This value
makes it easier to compare investment options.
Using Approximate Yield with Mutual Funds
The formula for approximate yield of an investment...

Pax World Balanced is a highly respected, socially responsible
mutual fund of stocks and bonds. Vanguard Balanced Index is another
highly regarded fund that represents the entire U.S. stock and bond
market (an index fund). The mean and standard deviation of
annualized percent returns are shown below. The annualized mean and
standard deviation are for a recent 10-years period.
†. Pax World Balanced: x = 9.55%; s = 13.83% Vanguard Balanced
Index: x = 8.79%; s = 12.32%
(a) Compute...

Pax World Balanced is a highly respected, socially responsible
mutual fund of stocks and bonds. Vanguard Balanced Index is another
highly regarded fund that represents the entire U.S. stock and bond
market (an index fund). The mean and standard deviation of
annualized percent returns are shown below. The annualized mean and
standard deviation are for a recent 10-years period.†. Pax World
Balanced: x = 9.43%; s = 14.28% Vanguard Balanced Index: x = 9.00%;
s = 12.80% (a) Compute the...

A European growth mutual fund specializes in stocks from the
British Isles, continental Europe, and Scandinavia. The fund has
over 450 stocks. Let x be a random variable that represents the
monthly percentage return for this fund. Suppose x has mean μ =
1.3% and standard deviation σ = 1.5%. (a) Let's consider the
monthly return of the stocks in the fund to be a sample from the
population of monthly returns of all European stocks. Is it
reasonable to...

A European growth mutual fund specializes in stocks from the
British Isles, continental Europe, and Scandinavia. The fund has
over 200 stocks. Let x be a random variable that
represents the monthly percentage return for this fund. Suppose
x has mean μ = 1.4% and standard deviation
σ = 1.3%.
(a) Let's consider the monthly return of the stocks in the fund
to be a sample from the population of monthly returns of all
European stocks. Is it reasonable to...

Which of the following statements concerning the variance are
correct? (note: there can be more than one correct answer)
Group of answer choices
a.The larger the variance, the greater the total risk of the
investment.
b.If a stock portfolio is well diversified, then the portfolio
variance may be less than the variance of the least risky stock in
the portfolio.
c.The larger the variance, the smaller the standard
deviation.
d.The larger the variance, the more the actual returns tend to...

A European growth mutual fund specializes in stocks from the
British Isles, continental Europe, and Scandinavia. The fund has
over 500 stocks. Let x be a random variable that
represents the monthly percentage return for this fund. Suppose
x has mean μ = 1.3% and standard deviation
σ = 0.7%.
(a) Let's consider the monthly return of the stocks in the fund
to be a sample from the population of monthly returns of all
European stocks. Is it reasonable to...

With respect to voting rights, preferred stockholders
typically
Select one: a. have voting rights that are preferable ( i.e.,
better) than the voting rights of common stockholders.
b. have no voting rights, unless the firm fails to pay two
consecutive quarterly dividends, at which point the preferred
shareholders can elect a certain number of corporate directors.
c. have one vote per shareholder, regardless of the number of
shares they own.
d. have the identical voting rights as common stockholders.
Owning...

Which of the following is CORRECT?
Select one:
A. A traditional active manager begins with a pool of investment
capital, tries to identify stocks that she thinks would appreciate
the most, and, therefore, would decide to include those in an
investment portfolio.
B. Whatever that manager’s benchmark, if the active manager is
uninformed about a particular stock, she will not hold it in the
investment portfolio.
C. Exchange-Traded Funds are usually more tax-efficient in the
sense that they are less...

Which of the following statements is correct?(x)Adding stocks to
your portfolio can reduce firm-specific risk, but you will not
eliminate market risk.(y)A low standard deviation means that the
investment is less likely to achieve a much higher return than its
average, but a low standard deviation indicates that the investment
is less risky.(z)Expected returns may differ from actual returns
because of an unforeseen economic expansion.
A.(x), (y) and (z)B.(x) and (y) onlyC.(x) and (z) onlyD.(y) and
(z) onlyE.(x) only
A...

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