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  • What Is A Mutual Fund?

    Transféré par

    Anuradha Shetty
    20 vues11 pages
    A mutual fund is a trust that pools investments from multiple investors. It provides benefits like professional management, diversification, liquidity, and high regulation. However, it also has drawbacks like management costs and no guarantee of returns. A mutual fund evaluates its performance using metrics like net asset value, expense ratio, returns, and evaluation ratios such as the Sharpe Ratio and Treynor Ratio. Factors that affect selecting a mutual fund include past performance, fund size, age, expense ratio, and the price-to-earnings ratio of stocks in the portfolio.

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    Mutual Funds

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    A mutual fund is a trust that pools investments from multiple investors. It provides benefits like professional management, diversification, liquidity, and high regulation. However, it also has drawbacks like management costs and no guarantee of returns. A mutual fund evaluates its performance using metrics like net asset value, expense ratio, returns, and evaluation ratios such as the Sharpe Ratio and Treynor Ratio. Factors that affect selecting a mutual fund include past performance, fund size, age, expense ratio, and the price-to-earnings ratio of stocks in the portfolio.

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    20 vues11 pages

    What Is A Mutual Fund?

    Transféré par

    Anuradha Shetty
    A mutual fund is a trust that pools investments from multiple investors. It provides benefits like professional management, diversification, liquidity, and high regulation. However, it also has drawbacks like management costs and no guarantee of returns. A mutual fund evaluates its performance using metrics like net asset value, expense ratio, returns, and evaluation ratios such as the Sharpe Ratio and Treynor Ratio. Factors that affect selecting a mutual fund include past performance, fund size, age, expense ratio, and the price-to-earnings ratio of stocks in the portfolio.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 11

    Strategic Financial Management Chapter 9. Mutual Funds What is a mutual fund?

    Trust that pools the investments of investors.

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 1

    Strategic Financial Management Chapter 9. Mutual Funds How it works: Typical MF structure

    Benefits: Professional Management, Diversification, Liquidity, Highly regulated

    Drawbacks: Management Cost, no guarantee, unethical practices

    Performance Evaluation 1. NAV = Net Assets / Outstanding Units Nature of Asset Liquid Asset Debentures & Bonds Illiquid Assets Valuation Rule Book value / closing market price Closing traded price or yield Last available price or BV whichever is lower

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 2

    Strategic Financial Management Chapter 9. Mutual Funds

    Net Assets = Value of investments as per above rule + Receivables + Accrued Income + Other Assets Accrued Expenses Payables Other Liabilities 2. Initial expenses & Ongoing expenses Expense Ratio = Expense / Average value of portfolio Computation of returns

    MF Returns

    Dividend (D1)

    Realised Capital Gain (CG1)

    Unrealised Capital Gain

    Annual Return =

    Evaluation Ratios:

    1+1+(10) 0

    100

    Sharpe Ratio = Excess return per unit of SD. (Return Portfolio Risk Free) / SD Adv. Used to rank risk-adjusted performance of various portfolios, higher the better Disadv. Useful only for comparison

    Treynor Ratio = Excess return per unit of Beta (Return of portfolio Risk Free) / Beta Treynor Measure vs. Sharpe Measure. The Sharpe measure evaluates the portfolio manager on the basis of both rate of return and diversification (as it considers total portfolio risk in the denominator). If we had a fully diversified portfolio, then both the Sharpe and Treynor measures should given us the same ranking. A poorly diversified portfolio could have a higher ranking under the Treynor measure than for the Sharpe measure.

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Jenesens Alpha Difference between actual return and expected return (CAPM)

    Page 3

    Strategic Financial Management Chapter 9. Mutual Funds Factors effecting the selection of MF Past performance, Size of the fund, Age of the fund, Expense Ratio, PE ratio (of the stocks in portfolio) Unique Questions: Following questions are selected from previous examinations and cover all the question types. Question 1

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 4

    Strategic Financial Management Chapter 9. Mutual Funds Question 2

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 5

    Strategic Financial Management Chapter 9. Mutual Funds Question 3

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 6

    Strategic Financial Management Chapter 9. Mutual Funds Question 4

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 7

    Strategic Financial Management Chapter 9. Mutual Funds Question 5

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 8

    Strategic Financial Management Chapter 9. Mutual Funds Question 6

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 9

    Strategic Financial Management Chapter 9. Mutual Funds

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 10

    Strategic Financial Management Chapter 9. Mutual Funds

    If you have any queries put it up on www.pace2race.com/forum http://www.Pace2Race.com

    Page 11

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