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Chapter 17: Q. 23 (page 426)

What is a mutual fund?

Short Answer

Expert verified

It is a well-managed financial instrument in which individuals invest their money and the funds manage their capital.

Step by step solution

01

Introduction

A financial investment is an asset to put money in with the expectation of it growing in value.

02

Explanation of solution.

A mutual fund is a professionally managed investment vehicle that takes money from clients, invests it on their behalf, and charges a nominal fee is charged. It is issued by a number of companies that are experts in the field of investment. This sort of investing is suitable for those who want to invest their money but lack market understanding. The fund gathers funds from all investors and invests them in a variety of asset classes, including debt, equities, and liquid assets. Profits or losses have always been shared by all participants.

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