Question

What does an asset transformer do? Why is asset transformation a risky activity?

What does an asset transformer do? Why is asset transformation a risky activity?

Homework Answers

Answer #1

Asset Transformers buy securities from corporation create mutual funds out of the securities bought and resell it to the public with a spread on their purchase price. These mutual funds provide more benefits to customers than directly buying from customers.

It is a risky activity because rate of return required from asset transformer will be higher than from individual company due to the spread on it making it more risky. Higher the spread more is the risk of these assets.

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