Saturday, 15 September 2018

GUJARAT POLICE MODEL PPAPER -4

GUJARAT POLICE MODEL PAPER -4

A mutual fund is a type of financial intermediary that pools the funds of investors who seek the same general investment objective and invests there in a number of different types of financial claims (e.g., equity shares, bonds, money market instruments).
pThese ooled funds provide thousands of investors with proportional ownership of diversified portfolios managed by professional investment managers. The term ‘mutual’ is used in the sense that all its returns, minus its expenses, are shared by the fund’s unit holders.
Pass-Through Structure:

             POLICE MODEL PAPER -4

In a sense, mutual fund is the purest form of financial intermediary because there is almost perfect pass through of money between unit holders (savers) and the securities in which the fund invests.

Unit holders are indicated a-priori in what type of securities their funds will be invested. Value of the securities held in the fund portfolio is trans­lated on the daily basis directly to the value of the fund units held by the unit holders.

By contrast, a commercial bank is not a pass through type of financial intermediary. Banks collect deposits from depositors (savers). The depositors have no specific know­ledge of how their funds will be used.

Bank invests the monies of the depositors in loans & advances which the bank officers feel appropriate at the time. On the deposits collected banks usually give a specified rate of return (interest) that is not linked to the performance of its loans & advances portfolio


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