This can be a guidance while taking investment decisions. Fees and Expenses charged by the fund house - The net returns from a particular scheme are dependent upon the fees and expenses charged by the fund house. Mutual funds levies charges such as exit loads, switching charges and fund management fees. The charges are deducted from the scheme’s NAV and thus an investor should ideally look for a mutual fund scheme which has a lower fees and expense ratio. Investment Options- A mutual fund scheme offers various options for investing like the Growth and Dividend – and under the Dividend option, there are sub-options namely, the Dividend Pay-out option and Dividend Re-investment Option.
CAPITAL MARKET THEORY The Concept of Capital Market Theory is that it tries to describe and evaluate the advancement of capital and likewise financial market over a certain period of time. The Capital Market Theory in general tries to clearly define and foresee the development and advancement of capital. It is also known to be a common term that is used for the study of securities. In terms of the relationship between rate of returns seeked by all investors and likewise the inheritance of risk that comes along. The main purpose of this capital market theory model is that seeks to “price assets” but more popularly “shares” among investors.
Return on Assets Formula: The return on assets ratio formula is calculated by dividing net income by average total assets. This ratio also corresponds to the total asset turnover and product of the profit margin. Either formula can help you find out the return on total assets. Generally, average total assets are preferred because asset totals can fluctuate during the accounting year. You don’t have to do a lot, just sum up the beginning and ending assets on the balance sheet and divide the answer by two, and there you'll have your average assets for the year.
In general, Trade-Off Theory is another approach on gearing. In addition, this theory recognizes that target debt ratio varies from different organisation (Peake and Neale, 2009). However, the application of the shield tax applies to companies that are safe, with tangible assets, taxable income to shield must to have a peak target ratio. Furthermore, that does not have wealth maximization, and are high in risk resort to equity financing. However when expense are involved there are deferments in the optimum and when no expense is involved the target debt ratio is applicable (Brealy, Myers, Allen, 2011).
1. Please describe the role of an investment advisor? What are the outcomes for a good advisor? In which case the client and the advisor will be in “win-win situation”? Investment advisors provide clients, which are the individual investors advice on financial matters including financial planning and selling securities and make recommendations on the on ways to best utilize their money.
In case of Hedge funds fees can be categorized into two parts: • Mangement Fees • Performance Fees Sometimes investors would refer these fees as “X” and “Y” where X represents Management Fees and Y represents Performance fees. Management Fee Hedge fund management fee are typically 2% of Net Asset Value which is little higher than as compared to mutual Fund, but the concept of Management fee is same for a hedge fund as they provide the same service that the management fee covers in mutual funds. The fees could be higher than normal if the manager is in high demand and has had a very good track record. These funds are designed to pay for expense of manager fee which normally includes: • Employee Salaries • Office Space /Rent •
Meaning of Mutual Fund A mutual fund is a trust that pools the savings of a number of investors who share a common the financial goal. The income earned through this investment and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. The money thus collected and then invested in capital market instruments such as the debentures, shares, and other securities. Thus the mutual fund is a most suitable investment for the common man as it offers an opportunity to invest in a diversified way, the professionally managed though basket of securities at a relatively low cost. Mutual Fund Operation Flow Chart Now let’s understand how it differs from portfolio management.
AIS can be relied on and is useful for making decisions. The data and information provided by the system can be used to plan control and make decisions. It helps the management with performance indicators at all stages of the company and give statistics between the financial performances and financial measures of performance throughout the years. The information which is attained from the AIS assist with making financial decisions and analyzing the company financial performance against the industry or past information. Certain information such as the companies Return on Assets, return on equity, and Earnings per Share.
CHAPTER 1 INTRODUCTION INSURANCE Insurance means equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a risk management form primarily used to hedge against the risk of uncertain loss. An insurer is selling the insurance; the insured is the person buying the insurance policy. The money to be charged for a certain amount of insurance coverage is called the premium. The insured receives a contract which is called the insurance policy, it details with the conditions and circumstances under which the insured will be financially compensated.
Advantages of Mutual Funds for Investors Professional Management Mutual funds offer investors the opportunity to earn an income or build their wealth through professional management of their investible funds. There are several aspects to such professional management viz. investing in line with the investment objective, investing based on adequate research, and ensuring that prudent investment processes are followed. Affordable Portfolio Diversification Units of a scheme give investors exposure to a range of securities held in the investment portfolio of the scheme. Thus, even a small investment of Rs 5,000 in a mutual fund scheme can give investors a diversified investment portfolio.