1. What is mutual fund? Describe its nature of the business?

Mutual fund is not a manufacturing business but making investments whose assets are
stocks and bonds. Mutual funds are operated by full-time professional money managers
whose job is to ensure that the fund’s investments will produce capital gains and/or income
for its investors. If you are investing in mutual funds you do not need to choose which
stocks to buy and when to sell them. The mutual fund company issues shares to the public
that represent their holdings in the fund

2. Distinguish one basic type of mutual fund from the other by citing at least one (1) example
for every term mentioned.

Money market fund invests purely in short-term (1 year or less) debt instruments. A money market
fund is a kind of mutual fund that invests only in highly liquid near-term instruments such as cash, cash
equivalent securities, and high credit rating debt-based securities with a short-term, maturity—less than
13 months. An example of money market fund is ALFM Money Market Fund, Inc. On the other hand,
Equity fund invests primarily in shares of stock. An equity fund is a mutual fund that invests principally in
stocks. It can be actively or passively (index fund) managed. Equity funds are also known as stock funds.
An example of an equity fund is, Philequity Fund, Inc.

3. A corporate bond has a coupon interest rate of 8.14%, and the closing price of the bond is
Php 82.17. Determine the current yield.

4. After a year, you decide to redeem all your shares from the equity fund which you have
originally invested at Php 1,500,000. Suppose you checked the NAVPS originally Php 5.2341 and later
found that it is already Php 5.8976 per share. Calculate your money in terms of number of shares based
on the previous equity fund. Find the value of returns and its rate of gain over your original investment.

5. Suppose Php 95, 254.75 was invested. After 8 months or 240 days, the total market value is
Php 105, 964.37. What is its appreciation in value? Determine the absolute yield for 240 days.