Securities traded in active financial markets are liquid assets. explain why liquidity is important to individual investors and to mutual funds.

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05-09-2022
Business

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Securities traded in active financial markets are liquid assets. explain why liquidity is important to individual investors and to mutual funds.

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tutorconsortium344 tutorconsortium344 · Answer 1 · 2022-09-09T10:31:39-04:00

Assets that are liquid are securities traded on vibrant financial markets.

Liquidity is crucial because investors want to be able to swiftly and easily convert their investments into cash when it's required or desirable to do so. Investing in securities like stocks, bonds, and short-term debt is what a mutual fund does, which is a business that pools money from many people. The mutual fund's portfolio is its collective holdings. In mutual funds, investors purchase shares.

How are mutual funds operated?

By combining money from numerous investors, mutual funds function. Then, stocks, bonds, and other securities are purchased using that money. Mutual funds provide quick diversity (and a correspondingly lower risk environment) to investors because they invest in a variety of businesses.

To know more about mutual funds

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Securities traded in active financial markets are liquid assets. explain why liquidity is important to individual investors and to mutual funds.

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