Mutual Funds and Individual Investment Constraints
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Questions and Answers

What is one of the factors influencing the investment strategy of insurance companies?

  • Cash Reserve Ratio (CRR ratio)
  • Timing and amount of future claims (correct)
  • Interest rate spreads
  • Statutory Liquidity Ratio (SLR ratio)
  • Which type of funds are usually initiated by a non-refundable capital contribution and managed by trustees for specific purposes?

  • Endowment funds (correct)
  • Pension funds
  • Banks
  • Insurance companies
  • What is the main source of income for banks?

  • Cash Reserve Ratio (CRR ratio)
  • Statutory Liquidity Ratio (SLR ratio)
  • Premiums from policyholders
  • Interest rate spreads (correct)
  • What distinguishes assurance or endowment policies from term insurance policies?

    <p>Higher premiums</p> Signup and view all the answers

    In the context of large organizations, which investor group typically forms a substantial portion of various financial instrument investors?

    <p>Pension funds</p> Signup and view all the answers

    Why do individuals often prefer mutual funds over managing investments themselves?

    <p>Individuals have limited knowledge of investment outlook and struggle to keep up with changes in the economic environment.</p> Signup and view all the answers

    How are professionals managing mutual funds compensated?

    <p>By receiving remuneration linked to the performance of the funds.</p> Signup and view all the answers

    What is a key characteristic of mutual funds that distinguishes them from individual investment strategies?

    <p>They pool investors' money and invest according to pre-specified parameters.</p> Signup and view all the answers

    Why are pension funds created by employers or employee unions?

    <p>To manage the retirement funds of employees.</p> Signup and view all the answers

    In what way do mutual funds benefit individual investors in terms of profit distribution?

    <p>Profits are distributed among individual investors according to their holdings in the fund.</p> Signup and view all the answers

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