Q1. What is a mutual fund? In what sense is it a financial institution? give an

Question

Q1. What is a mutual fund? In what sense is it a financial institution? give an example of mutual fund

Q2. How is the net asset value (NAV) of a mutual fund determined? What is meant by the
        term marked-to-market daily? example.

Q3. An investor purchases a mutual fund for $50. The fund pays dividends of $1.50,
       distributes a capital gain $2, and charges a fee of $2 when the fund is sold on year for
       $52.50. What is the net rate of return from this insurance? give formula and step by step explanation.

Explanation / Answer

Q1 Mutual fund is pool of money towards a trust.Trust then invests the money on the behalf of people/investors to make return for clients. Investment manger charges fee for managing the mutual fund.yes it is a financial institution involved in investing the money on behalfi of otehr people

Q2 It is the market value of the mutual fund after deducting its liabilities divided by number of units alloted

Assets -Liabilities/No of units = NAV

Assets are the investments made

Liabilities are the fees, expenses etc

Mark to Market would be mean market value of the investment is constantly changing, therefore the nav would change daily

Q3 Total gains = Dividend + Capital Gain +Reliazed capital gain

=1.5+ 2+ 2.5

=6

So total gain = 6/50 = 12%

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