Question

Compare and contrast between:

e.Mutual funds and ETFs

f.Passive and Active investment strategies

g.Fundamental and Technical Analysis

Answer 1

E. Exchange traded fund are highly liquid and they are tradable on the stock exchanges whereas Mutual Funds are not tradable on the stock exchanges and they are having a low liquidity in comparison to the exchange traded fund

Mutual Funds are having a very high amount of professional fee management fair exchange traded fund are mostly passive funds and they are having a lower fees management. Mutual funds are also not short selled in the market whereas exchange traded fund are short selled in the market.

B. passive investment is related to replicating the rate of return of the index and just copying the index and it will always be focusing upon never underperforming the index rate of return and never outperforming the index rate of return.

active investment will always believing in the philosophy of continuously suffering of the stock in order to maximize the rate of return in the market and beat the market rate of return.

Passive investment believe in Efficient market hypothesis where active investment does not believe in Efficient market hypothesis.

G. fundamental analysis is related to finding the intrinsic value of the company and investing in the company after finding that the company is overvalued or undervalued whereas technical analysis is mostly related to finding out the structure of the price and volume of a share.

Technical analysis most probably related to traders whereas fundamental analysis is related to investors in the long run

technical analysis is applicable in the short run mostly whereas, fundamental analysis is done in the long period of time.

Technical analysis will provide no return in weak market efficiency whether fundamental analysis will have a chance of providing additional rate of return in a weak Efficient market