Theory Of Investments Book Report Writing Assignemnt (Book Report Sample)
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Theory of Investments
Table of Contents
In analyzing mutual funds, the assumption that better performance is due to luck rather than skill, means that such performances ought not to be rewarded. Nonetheless, this argument misses the point that gathering information on past performance does not negate the fact the managers have different abilities (Berk, and Green, 2004, p1270.). Similarly Bollen & Busse (2004) highlighted that the performance of the mutual funds in the short term is better than the market average among top fund managers. This report focuses on the need to invest in mutual funds to pool resources and invest in different financial assets. This includes a look at the benefits of mutual funds and bonds as the most appropriate choice. I will also highlight that investment mutual funds have good returns and can meet different investment needs.
The role of investment companies
The investment companies manage funds for the investors, and may choose to manage different mutual funds. The fund managers have experience and skills to derive greater resources after nesting. The mutual funds are the open-end investment companies and investments in bonds, equity, asset allocation, index funds, and international markets. When investing in the financial assets the expectation is that they will generate income, and the companies provide strategic guidance.
The average return of the actively managed funds was below the Wilshire Index for 25 of 41 years in the period 1971-2011 (Bodie, Kane and Marcus). However, there were firms that performed above the fund consistently, and the good managers were rewarded for their performance. Jegadeesh and others (2004, p1085), pointed out that when there were signals predicting improved future returns, the stocks that analysts recommended outperformed those that were unfavorably recommended (Similarly, when analysts upgraded stocks there is a tendency to outperform the downgraded ones (Jegadeesh et al., 2004, p. 1085). Analysts who look at the value of different financial instruments and specifically equity make judgments based on the information they have and their beliefs about these
- Theory Of Investments Book Report Writing AssignemntDescription: In analyzing mutual funds, the assumption that better performance is due to luck rather than skill, means that such performances ought not to be rewarded....3 pages/≈825 words | 7 Sources | Harvard | Accounting, Finance, SPSS | Book Report |