FIN 501 Chapter Notes - Chapter 5: Net Asset Value, Defined Contribution Plan, Investment Advisory
17 Jul 2012
School
Department
Course
Professor
Document Summary
Mutual funds are simply a means of combining or pooling the funds of a large group of investors. The buy and sell decisions for the resulting pool are then made by a fund managers, who is compensated for the service provided. Since mutual funds provide indirect access to financial markets for individual investors, they are a form of financial intermediary. One of the reasons for proliferation of mutual funds and fund types is that mutual funds have become consumer products. They are created and marketed to the public in ways that are intended to promote buyer appeal. Defined benefit plans are rapidly being replaced by defined contribution plans. With a defined contribution plan, your employer will contribute money each pay period to a retirement account on your behalf, but you have to select where the funds go. With this, the benefit you ultimately receive depends entirely on how your investments do; your employer only makes contribution.
