To determine:
Which amongst the two fixed income unit investment trust or open end fixed income mutual fund will have less operating expense?
Introduction:
A Unit Investment trust refers to the investment company which provide fixed portfolio that comprises of bonds and stock in the form of redeemable units for a particular time period to its investor. This helps an investor to earn dividend income and capital appreciation. Mutual fund refers to the investment policy under which the funds are pooled from the investor and same is invested in different securities such as debentures, bonds and stocks. Mutual funds are advantageous for the small investor as it provides leverage to make investments in small amounts.
Answer to Problem 1PS
Fixed income unit investment trust must have lesser expense associated with operation when compared with open end fixed income mutual fund.
Explanation of Solution
In this situation, once the trust is established the investment trust portfolio is fixed. There is no need to incur any expenses for the
Want to see more full solutions like this?
Chapter 4 Solutions
INVESTMENTS(LL)W/CONNECT
- please give me the corret answer Which of the following is not a type of managed investment company? unit investment trusts open-end funds closed-end funds hedge fundsarrow_forwardWhy are mutual funds considered good investments for long-term investors?arrow_forwardWhich of the following investment has the lowest risks and lowest returns! EE savings bonds. Money market savings accounts. Real estate. Exchange-traded funds.arrow_forward
- Why do you think that some mutual funds would describe themselves as passive?arrow_forwardDefine mutual fund, and explain the advantages and disadvantages of this popular investment vehicle.arrow_forwardWhat are some important differences between mutual fund ,exchange traded funds and hedge funds? how are they similar?arrow_forward
- What are the pros and cons of investing into the following assets? Make comparison. a. A unit trust b. A closed-end fund? c. A stock of a companyarrow_forwardWhat is different between long-term mutual funds and money market mutual funds and what are the main regulators of mutual funds?arrow_forwardWhat value do mutual funds add for individual investors and how?arrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT