Mutual fund
Mutual fund is the financial institution that sells shares in the fund and uses the proceeds to buy stocks, long-term bonds, or short-term debt instruments. The resulting dividends, interest, and capital gains are distributed to the fund's shareholders after the deduction of operating expenses. Some funds specialize in certain types of securities, such as growth stocks, international stocks, or municipal bonds.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Mutual fund. A corporation that sells shares in the fund and uses the proceeds to buy stocks, long-term bonds, or short-term debt instruments. The resulting dividends, interest, and capital gains are distributed to the fund's shareholders after the deduction of operating expenses. Some funds specialize in certain types of securities, such as growth stocks, international stocks, or municipal bonds.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Mutual funds. Organizations that pool investor funds to purchase financial instruments and thus reduce risks through diversification.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
