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