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a) what is the mutual fund? detailed explanation b) what is the difference between open-end fund...

a) what is the mutual fund? detailed explanation

b) what is the difference between open-end fund and closed-end fund?

Solutions

Expert Solution

A. Mutual fund is a financial vehicle which is used to collect the money from a pool of investor and which is used to invest that money with the use of expertise knowledge in exchange of a commission to grow that money for the unitholders.

These Mutual Funds used to invest in share Markets and other assets which are meant for appreciation in the long term and they are highly focused in maximization of the unitholders value.

B). Difference between open ended fund and closed ended fund as follows-

1. Open ended fund are highly liquid and the money have no fixed lock in period while the closed ended fund are less liquid and they have lock in period.

2. open ended funds are not listed on stock exchange while close ended fund are listed on stock exchange.

3.it reflects 100% of its net asset value in case of open ended fund but closed ended fund will always be trading at a discount to the net asset value because of the liquidity pressure.

4.there is a pressure of redemption of open ended fund while there is no pressure of redemption in closed ended fund.

jeff jeffy answered 1 year ago
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