What type of securities are included in a money market fund? 2. Why would you like to
Question:
What type of securities are included in a money market fund?
2. Why would you like to invest your money in a money market fund?
3. What is the maturity requirement for the securities included in a money market fund as per NI 81-102?
4. Are money market funds free of default risk?
5. What is the major difference between a money market fund and a GIC?
6. How the current yield and the effective yield are calculated on a money market fund? Consider a fund with $10 million of net assets that has an ending net asset value of $10,015,000. Calculate the current yield and effective yield of that money market fund? What is the underlying assumption of the effective yield (it is related to the seven-day yield)
Mortgage mutual funds:
1. What is the difference between an open mortgage and a closed mortgage? Why do banks charge a penalty for early repayment of a closed mortgage?
2. Differentiate between conventional and non-conventional mortgage.
3. Why would you invest in a mortgage mutual fund? Who is it suitable for?
4. Assume that you are a fund manager who previously bought a mortgage at par, and the interest rate on the mortgage is fixed at 5%. What would happen to the NAVPS of the mortgage if mortgage rates suddenly increase to 6%?
5. What are the major risks you should consider before investing in a mortgage mutual funds?
6. Which instrument do you think has more interest rate risk - a mortgage or a bond? Based on your assessment, which instrument should provide a higher return?
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman