Questions: Shareholders in mutual funds can receive a return on their investment in one of ways.
Transcript text: Fill in the Blank Question
Shareholders in mutual funds can receive a return on their investment in one of $\square$ ways.
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Solution
The answer is: three
Explanation:
Shareholders in mutual funds can receive a return on their investment in one of three ways:
Dividends: Mutual funds may earn income in the form of dividends on stocks or interest on bonds. The fund then distributes this income to its shareholders.
Capital Gains Distributions: If the mutual fund sells securities that have increased in price, it realizes a capital gain. These gains are then distributed to shareholders.
Increased Net Asset Value (NAV): If the market value of the fund's portfolio increases, the value of the fund's shares increases. Shareholders can sell their shares at a higher price than they paid, realizing a profit.
These are the primary ways shareholders can earn returns from mutual funds.