Mutual Funds

Question 1

are pools of money collected from many investors for the purpose of investing in stocks, bonds, or other securities.

Answer 1

Mutual Funds

Question 2

Common Types of Mutual Funds

Answer 2

Money Market Funds
Fixed Income Funds
Equity Funds
Balanced Funds
Index Funds
Specialty Funds

Question 3

Money Market Funds

Answer 3

invest in short-term fixed-income securities. Examples of short-term fixed-income securities would be government bonds, Treasury bills, commercial paper, and certificates of deposit.

Question 4

Fixed Income Funds

Answer 4

buy investments that pay a fixed rate of return.

Question 5

Equity Funds

Answer 5

invest in stocks.

Question 6

Balanced Funds

Answer 6

invest in a mix of equities and fixed-income securities

Question 7

Index Funds

Answer 7

aim to track the performance of a specific index.

Question 8

Specialty Funds

Answer 8

focus on a very small part of a market such as energy, telecommunications, healthcare, industrials, etc.

Question 9

Benefits of Investing in a Mutual Fund

Answer 9

Professional Management
Investment Diversification
Liquidity

Question 10

Disadvantages of a Mutual Fund

Answer 10

Management Fees and Operating Expenses
Loss of Control
Poor Performance