Question: An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash or liquid money market assets. How does this

An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash or liquid money market assets. How does this affect the fund's return in a year in which the market increases in value? How about during a bad year? Closed-end funds do not typically hold cash. What is it about the structure of open-end and closed-end funds that would influence this difference?

Step by Step Solution

★★★★★

3.63 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

In an up market the cash balance will reduce the overall return since the fund is p... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

175-B-C-F-R-A-R (431).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

What is an 'executory contract'? How does this affect the dates on which revenue is recognised under the Conceptual Framework?

A U.S. thrift has most of its assets in the form of Swiss franc-denominated floating-rate loans. Its liabilities consist mostly of fixed-rate dollar-denominated CDs. What type of currency risk and...

How does rainwater naturally become acidic? How does this affect limestone?

Open-End versus Closed-End Funds (LO2, CFA3)An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash or liquid money market assets. How does this affect the...

6. Open-End versus Closed-End Funds (LO2, CFA3) An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash or liquid money market assets. How does this affect...

6. Open-End versus Closed-End Funds (LO2, CFA2) An open-end mutual fund typically keeps a percentage, often around 5 percent, of its assets in cash or liquid money market assets. How does this affect...

Q&A 1. 2. What are the benefits to small investors of investing via mutual funds? What are the costs? What are the advantages and disadvantages of exchange-traded funds versus mutual funds? re some...

Open-end equity mutual funds find it necessary to keep a significant percentage of total investments, typically around 5% of the portfolio, in very liquid money market assets. Closed-end funds do not...

3. Open-end equity mutual funds find it necessary to keep a significant percentage of total investments, typically around 5% of the portfolio, in very liquid money market assets. Closed-end funds do...

Methyl-labeled [14C] methionine at a specific activity of 2.0 millicuries per millimole was injected into rats. Six hours later the rats were killed. Phosphatidylcholine was isolated from the liver...

A hydrogen atom undergoes a transition from a 2p state to the Is ground state. In the absence of a magnetic field, the energy of the photon emitted is 122 nm. The atom is then placed in a strong...

Explain what the Industrial Revolution was and where it began.

2.48 The following data give the time (in minutes) that each of 20 students waited in line at their bookstore to pay for their textbooks in the beginning of Spring 2009 semester. (Note: To prepare a...

Repeat Problems 2 and 3 assuming the initial margin requirement is 70 percent. Does this suggest a relationship between the initial margin and returns? Data From Problem 2 and 3 In Problem 2, suppose...

You short sold 1,000 shares of stock at a price of $36 and an initial margin of 55 percent. If the maintenance margin is 35 percent, at what share price will you receive a margin call? What is your...

Using the information in Problem 1, construct your equity account balance sheet at the time of your purchase. What does your balance sheet look like if the share price rises to $24? What if it falls...

Butler Manufacturing manufactures two products, (1) Regular and (2) Deluxe. The budgeted units to be produced are as follows: Units of Product 2016 July August September October Deluxe 15,000 10,000...

Question 7 Not yet answered Marked out of 10.00 P Flag question 2. Discuss The difference between management and administration" in detail and in your own words

Periodic Inventory by Three Methods Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and...