When choosing a mutual fund, one of the most important things to consider is your investment objective. Mutual funds are classified into the following three categories: income, growth, or growth and income. The following exercises feature examples of three investors, each with one of the stated goals. Complete the paragraphs to illustrate your understanding of each mutual fund category. Income Objective Stelios is a retiree with no children who is looking to purchase a mutual fund that will provide a relatively safe investment as well as regular income payments. Among mutual funds with an income objective, Stelios can either buy shares in , which invest in CDs, government securities, and short-term obligations money market funds bond funds issued by corporations, or he can invest in the potential for capital appreciation as we bond funds money market funds Within the category of bond funds are even more specific options. Stelios decides to buy shares in a fund that invests in Treasury issues maturing in five to ten years, known as -term bonds. He is also collecting income from shares he already owns in a invests in high-yield, high-risk corporate bonds. for a slightly higher current income return and intermediate short long large-cap fund equity-income fund growth-and-income fund diversified market fund asset allocation fund mixed media fund mortgage-backed municipal junk Growth Objective Claire is a mother who already holds a diversified portfolio of conservative investments. She is looking to invest the money she received from a bonus at work in a mutual fund that invests in stocks with market capitalization of more than $10 billion. She decides to purchase shares. large-cap fund equity-income fund growth-and-income fund Growth and Income Objective Janos is a recent college graduate who plans to invest $300 from each monthly paycheck in a mutual fund. He is interested in a fund that balances current income and capital gains, but with an emphasis on capital gains, so he buys $2,000 worth of shares. He would also like to put some money into a fund that government corporate bond fund, a type of fund that divides investments wisely among different types of asset classes; therefore, he purchases shares as well. One feature common to all of the above mutual funds is the automatic investment plan. Based on the characteristics of the investors above, this feature would be of most interest to Stelios Janos Claire

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When choosing a mutual fund, one of the most important things to consider is your investment objective. Mutual
funds are classified into the following three categories: income, growth, or growth and income. The following
exercises feature examples of three investors, each with one of the stated goals. Complete the paragraphs to
illustrate your understanding of each mutual fund category.
Income Objective
Stelios is a retiree with no children who is looking to purchase a mutual fund that will provide a relatively safe
investment as well as regular income payments. Among mutual funds with an income objective, Stelios can either
buy shares in
, which invest in CDs, government securities, and short-term obligations
money market funds
bond funds
issued by corporations, or he can invest in
the potential for capital appreciation as we
bond funds
money market funds
Within the category of bond funds are even more specific options. Stelios decides to buy shares in a fund that
invests in Treasury issues maturing in five to ten years, known as
-term
bonds.
He is also collecting income from shares he already owns in a
invests in high-yield, high-risk corporate bonds.
for a slightly higher current income return and
intermediate
short
long
large-cap fund
equity-income fund
growth-and-income fund
diversified market fund
asset allocation fund
mixed media fund
mortgage-backed
municipal
junk
Growth Objective
Claire is a mother who already holds a diversified portfolio of conservative investments. She is looking to invest the
money she received from a bonus at work in a mutual fund that invests in stocks with market capitalization of more
than $10 billion. She decides to purchase
shares.
large-cap fund
equity-income fund
growth-and-income fund
Growth and Income Objective
Janos is a recent college graduate who plans to invest $300 from each monthly paycheck in a mutual fund. He
interested in a fund that balances current income and capital gains, but with an emphasis on capital gains, so he
buys $2,000 worth of
shares. He would also like to put some money into a fund that
government
corporate
bond fund, a type of fund that
divides investments wisely among different types of asset classes; therefore, he purchases
shares as well.
One feature common to all of the above mutual funds is the automatic investment plan. Based on the characteristics
of the investors above, this feature would be of most interest to
Stelios
Janos
Claire
Transcribed Image Text:When choosing a mutual fund, one of the most important things to consider is your investment objective. Mutual funds are classified into the following three categories: income, growth, or growth and income. The following exercises feature examples of three investors, each with one of the stated goals. Complete the paragraphs to illustrate your understanding of each mutual fund category. Income Objective Stelios is a retiree with no children who is looking to purchase a mutual fund that will provide a relatively safe investment as well as regular income payments. Among mutual funds with an income objective, Stelios can either buy shares in , which invest in CDs, government securities, and short-term obligations money market funds bond funds issued by corporations, or he can invest in the potential for capital appreciation as we bond funds money market funds Within the category of bond funds are even more specific options. Stelios decides to buy shares in a fund that invests in Treasury issues maturing in five to ten years, known as -term bonds. He is also collecting income from shares he already owns in a invests in high-yield, high-risk corporate bonds. for a slightly higher current income return and intermediate short long large-cap fund equity-income fund growth-and-income fund diversified market fund asset allocation fund mixed media fund mortgage-backed municipal junk Growth Objective Claire is a mother who already holds a diversified portfolio of conservative investments. She is looking to invest the money she received from a bonus at work in a mutual fund that invests in stocks with market capitalization of more than $10 billion. She decides to purchase shares. large-cap fund equity-income fund growth-and-income fund Growth and Income Objective Janos is a recent college graduate who plans to invest $300 from each monthly paycheck in a mutual fund. He interested in a fund that balances current income and capital gains, but with an emphasis on capital gains, so he buys $2,000 worth of shares. He would also like to put some money into a fund that government corporate bond fund, a type of fund that divides investments wisely among different types of asset classes; therefore, he purchases shares as well. One feature common to all of the above mutual funds is the automatic investment plan. Based on the characteristics of the investors above, this feature would be of most interest to Stelios Janos Claire
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