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Evaluating Mutual Fund Performance When buying a mutual fund, you might expect to earn money through (from dividends), (from increases in share price of the

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Evaluating Mutual Fund Performance When buying a mutual fund, you might expect to earn money through (from dividends), (from increases in share price of the fund's underlying securities), or both. You can calculate your total earnings from a given investment by determining the approximate yield. This value makes it easier to compare investment options. Using Approximate Yield with Mutual Funds The formula for approximate yleld of an investment can look intimidating, but it's just a function of three things: (1) dividends eamed, (2) capital gains distributions recelved, and (3) change in share price. Based on the information in the table, compute the approximate yleid for each of the two funds that follow. The approximate yield for Mutual Fund 1 is and the approximate yield for Mutual Fund 2 is True or False: For these investments to be equally attractive, Mutual Fund 1 must carry a lower risk than Mutual Fund 2. True False

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