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Brokerage house

A brokerage firm, or simply brokerage, is a financial institution that facilitates the buying and
selling of financial securities between a buyer and a seller.
Brokers are the people who handle customer orders to buy and sell securities. In the same way that a
grocery store acts as a middleman between shoppers and the companies that produce food, a broker
acts as a middleman between the securities that trade on the market and the investors who buy them.

Mutual funds

A Mutual Fund is a single portfolio of investments where investors put their money to
be managed by an asset management company on behalf of its many investors. This
allows each investor access to a professional managed pool of funds.
Fund Manager invests the fund’s capital in profitable avenues and attempt to earn a
return for the fund’s investors. The income earned through these investments and the
capital appreciation realized is shared by its unit holders in proportion to the number of
units owned by them.
Benefits Of Mutual Funds
Mutual fund investing offers important advantages especially for individuals who prefer
not to be involved directly in the hectic and time consuming process of studying
companies and then placing execution orders with brokers tracking price moment of
stock.
Professional Management
Mutual Funds keep a team of experienced and skilled professionals for the investment
decision making. Team consists of dedicated fund management and investment
research team which analyze the performance and prospects of companies and selects
suitable investments to achieve the objectives of the fund. The Fund Manager has the
experience and resources necessary to follow the markets, select investments, and
track their performance.
Diversification
Diversification is one of the most important benefits of mutual fund investing as it
reduces investment risk of concentration. In simple terms it can be explained through
below phrase: Do Not Put All the Eggs in One Basket.
Mutual Funds invest in companies across a broad cross-section of industries and
sectors. This diversification reduces the risk because seldom do all stocks decline at the
same time and in the same proportion. Because of diverse range, the ups and downs of
any one security have less effect on the fund’s overall performance. However, though
diversification can help reduce the risk and enhance the stability of investment, it does
not guarantee loss prevention.
Liquidity
Liquidity simply means being able to access your money when you need it. With mutual
funds you can buy and sell units easily, move money among different funds, and
redeem.
Affordability
As a small investor, you may find that it is not possible to buy shares of companies with
high share price. Such companies have low share base and high profits as a result
investors allocate them higher price. Mutual funds access to pool funds allow to buy
securities in market in every price category. Through mutual funds investors can enjoy a
diversified portfolio by investing as low as Rs 5,000.
Tax Benefits
To induce saving habits in general public, Government of Pakistan has given incentive
to investor in form of tax rebate. An investor can claim tax rebate by investing in mutual
funds and reducing his tax liability to government. Click Here
Also, investments held by investors for a period of 48 months or more qualify for
exemption from Capital Gains Tax
Convenience
Investors remain occupied with their daily task and find it difficult to follow market on
daily basis. Mutual funds on other hand acts on your behalf and monitor your
investment on minute to minute basis. Being expert in their area, they are also better
equipped to make decision on timely basis.
Return Potential
Due to their expertise in investment decision making and availability of dedicated
resources, Mutual Funds have the potential to provide a higher return in medium to long
term. Mutual funds also have advantage of diversification which reflects in better returns
in long term.
Transparency
Mutual funds are watched by regulators, settlement house (stock exchange), trustee,
auditors and in our case Shariah auditor also. Multiple levels oversee and audit builds
trust of investor as it makes investment process very transparent.
In addition to this, the Fund also prepares and discloses periodic financial statements,
which provide an in-depth review of all the major activities undertaken by the fund over
the period.

Flexibility
Mutual Funds provide various value added services which makes it very easy for
investors to manage and track their investments. They can even invest or redeem in
mutual fund by just sitting at home through online transactions.
Mutual funds have goal based plans such as Systematic Investment Plans (SIP) and
Savings Plans which are convenient for investors to invest and achieve their long term
objectives such as kids’ education or marriage.
Choice Of Schemes
Mutual Funds offer a variety of product schemes to suit your varying needs and financial
goals.
Well Regulated
All Mutual Funds are registered with SECP and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of Mutual
Funds are regularly monitored by SECP. In addition to that, mutual funds assets are
placed with trustee to further ensure investors asset protection.
Shariah compliant mutual funds’ operations are oversight by a renowned Shariah
Advisor to ensure the compliance with the Shariah guidelines.

Investment Bank
An Investment Bank raises capital (money, in the form of debt and equity) for companies and
advises them on financing and merger alternatives.
For example: Ford wants to open a new car factory. It requires money to build the factory. An
investment bank will advise Ford on what type of funds to raise, and then go to investors to raise the
money. Suppose Ford wanted to buy another car manufacturer, perhaps to increase its exposure to
Asia. An investment bank would evaluate car manufacturers in Asia that Ford might be able to buy. It
would then help Ford decide how much to pay, because determining a company’s value is complicated.

Why profilt maximization is not appropriate goal for firm?

Ans …. Although profit maximization appears to be the logical goal for any company, it has many
drawbacks. First, profit can be defined in a number of different ways, and variations in net income for
similar firms can vary widely. Second, accounting profits do not exactly equal cash flows. Third, profit
maximization does not account for timing and ignores risk associated with cash flows. An appropriate
goal for financial managers who do not have these objections is to maximize the value of the firm’s
current stock price. In order to achieve this goal, management must make financial decisions so that the
total value of cash inflows exceeds the total value of cash outflows

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