Thus open ended mutual funds buy stocks and bonds

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Unformatted text preview: the direct securities markets. They do so by exploiting the comparative advantages of size and diversification, with the transformation of financial claims, such as maturity transformation, a lesser concern. Thus, open-ended mutual funds buy stocks and bonds directly in financial markets and issue savers shares whose value is linked in a direct pro rata fashion to the value of the mutual fund’s asset portfolio. Similarly, money market mutual funds invest in short-term financial assets such as commercial paper, CDs, TABLE 1–3 Percentage Shares of Assets of Financial Institutions in the United States, 1860–2000 1860 1880 1900 1912 1922 1929 1939 1948 Commercial banks 71.4% 60.6% 62.9% 64.5% 63.3% 53.7% 51.2% 55.9% Thrift institutions 17.8 22.8 18.2 14.8 13.9 14.0 13.6 12.3 Insurance companies 10.7 13.9 13.8 16.6 16.7 18.6 27.2 24.3 Investment companies — — — — 0.0 2.4 1.9 1.3 Pension funds — — 0.0 0.0 0.0 0.7 2.1 3.1 Finance companies — 0.0 0.0 0.0 0.0 2.0 2.2 2.0 Securities brokers an...
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This document was uploaded on 03/09/2014 for the course ACC 301 at HELP University.

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