Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

When buying a mutual fund, you might expect to earn money through _____ (from dividends), _____ (from increases in share price of the fund's underlying

image text in transcribed

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. The formula for approximate yield of an investment can look intimidating, but it's just a function of three things: (1) dividends earned, (2) capital gains distributions received, and (3) change in share price. Based on the information in the table, compute the approximate yield 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: If both investments carry the same rate of risk, Mutual Fund 2 is a better investment than Mutual Fund 1. True False

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions