Closed-end funds generally invest in securities and financial instruments that are relatively illiquid, whereas most mutual funds invest in widely traded stocks and bonds. Explain the difference between closed-end and open-end funds and why this liquidity distinction matters.
Answer to relevant QuestionsWhat is the difference between a load fund and a no-load fund?Most money managers have a portion of their compensation tied to the performance of the portfolios they manage. Explain how this arrangement can create an ethical dilemma for the manager.Suppose that at the start of the year, a no-load mutual fund has a net asset value of $27.15 per share. During the year, it pays its shareholders a capital gain and dividend distribution of $1.12 per share and finishes the ...Describe how the Jensen measure of performance is calculated. Under what conditions should it give a similar set of portfolio rankings as the Sharpe and Treynor measures? Is it possible to adjust the Jensen measure so that a ...You have been assigned the task of comparing the investment performance of five different pension fund managers. After gathering 60 months of excess returns (i.e., returns in excess of the monthly risk-free rate) on each ...
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