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How can you be certain the entrance is at the lowest point? Momentum trading (following the
trend) is therefore preferable to prevent the opportunity cost of not making the best selection.
Draw the trendline to determine the location where the trend will change. Be cautious of
erroneous trendlines as well. Because of this, we need to be certain that an uptrend has begun.
Once we discover higher highs, we may be certain of the uptrend.
1. Investment kind
2. Return's kind
a. Income fund (steady income, high dividend yield stocks, value businesses, cash cows;
sometimes called as value funds; suitable for those in or near retirement; low risk capability)
b. Growth fund (high capital gains, investments in expanding businesses, greater risk tolerance)
a. Open end (sometimes referred to as unit funds; tax exemptions of up to $50,000 for
investments in open end funds; no particular conditions; no secondary market trading; no
market price risk; ability to accept more capital; lesser liquidity risk due to mutual fund's legal
obligation to liquidate)
b. Close end (specified expiration terms, traded on secondary markets, more risk due to market
price risk and volatility, limited capital, but also potentially higher reward)
Mutual funds firstly diversify portfolios. It's challenging to diversify for a little investment, but
mutual funds can help. Second, mutual funds have a defence mechanism. For instance, if
bonds account for 40% of the total investment, the fund is protected from a crash. In a third
place, savvy investors run mutual funds. Fourthly, investing in mutual funds is safer for first-time
investors. Fifth, because of the eligible investor quota, one can apply through mutual funds and
receive a greater number of shares in IPOs.
[market-based NAV] Must buy and sell at the NAV price. Initial investors receive a unit in
exchange for their initial investment, which is known as the par value or face value. This
process is known as the new fund offer.
Earnings per Unit (EPU) equals Market-based NAV less Cost-based NAV.
not as significant because the buying and selling are based on market value; The price rises in
direct proportion to the projected dividend yield (EPU), NAV is the mutual fund's valuation; For
mutual funds and banks, the price-to-NAV ratio should be close to 1; there are two methods of
analysis: gap analysis (the difference between the two NAVs), and the NAV itself; the greater
the market price's discount to the NAV, the more undervalued the asset is; The market price
and NAV will converge near the maturity date, and the EPU performs better. However, the
undervalued analysis performs less well. The price increases in direct proportion to the dividend
yield.
A mutual fund must release at least 70% of its EPU as dividends if it is not experiencing a loss.
Mathematical notes:
Subtract the management fee from the assets, but carry the running costs forward to the total
liabilities.
Brokerage fees are a liability, although they are actually automatically subtracted from assets.