What's the definition of: 'mutual funds' ?
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A mutual fund is operated by an investment company which raises money from shareholders and invests in a group of assets (usually stocks or bonds, following a stated set of objectives. Mutual funds sell shares of the fund to investors, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money from investors and use it to purchase stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund.
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Mutual funds are financial intermediaries which mobilize savings from investors, particularly the small investors and invest them in government ans other corporate securities. They serve as a link between the investors and the securities market.
- According to Bharti V. Pathak, “A Mutual Fund is a Financial Service Organization that receives money from shareholders, invests it, earns return on it, attempts to make it grow and agrees to pay the shareholders. Cash on demand for the current value of his investment”.
- According to Chandra Prasanna, “Mutual Fund is called unit trust or open-ended trust – a company that invests the fund of its subscribers in diversified securities and in turn issues units representing shares in those holdings. They make continuous offering of new shares at net asset value and redeem the shares on demand of net asset value determined daily by the market value of the securities they hold”.
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