Chapter 6, Problem 15AA

To determine

To discuss: The type of investment companies that hires professionals to manage the investments of a pool of investors.

Explanation of Solution

A mutual fund firm will employ the professionals to handle a group of investor’s assets.

A type of finance company comprising of a collection of money that various shareholders accumulate to invest in securities such as bonds, stocks, money market instruments, and other assets is called a mutual fund. They are run by professional portfolio executives who allocate the assets of the fund and aim at producing capital gains or dividends for investors of the fund. A mutual fund portfolio is designed and controlled to meet the investment goals set out in its prospectus.