[Solved] Which among the following is correct about an Equity Fund? (2024)

FAQs

Which among the following is correct about an equity fund? ›

The correct answer is It invests primarily in shares.

What is an equity fund? A mutual fund that is primarily invested in stocks.

Equity funds are those mutual funds that primarily invest in stocks. You invest your money in the fund via SIP or lumpsum which then invests it in various equity stocks on your behalf. The consequent gains or losses accrued in the portfolio affect your fund's Net Asset Value (NAV).

The correct option is d. Mutual funds indexed to a broad stock market indicator have generally earned a higher annual return than actively managed funds.

A fund is considered an equity fund if exposure to this type of asset is 75% or higher. Shares of listed companies are the most well-known equities. Other examples include currencies, commodities, preference shares, convertible bonds or investment funds themselves.

Equity financing involves selling a portion of a company's equity in return for capital. For example, the owner of Company ABC might need to raise capital to fund business expansion. The owner decides to give up 10% of ownership in the company and sell it to an investor in return for capital.

Equity finance is generally the issue of new shares in exchange for a cash investment. Your business receives the money it needs and the investor will own a share in your company. This means the investor will benefit from the success of your business.

Equity fund definition

Equity funds are often used in investment portfolios. “Equity” in a company is like the equity that homeowners have in their house; each speaks to a degree of ownership of the asset. Equity funds give investors fractional ownership of companies via the shares they purchased in the fund.

Equity funds are mutual funds with a high risk-return ratio that can withstand market volatility in the long run. Hence, they are good for a long-term investment that can give 10-12% returns but this may vary according to the market conditions.

What is the formula for equity funds? ›

What is equity and its formula? Equity is the residual value of a company after all its assets are liquidated and all liabilities to its creditors paid. The formula for equity is: Total Equity = Total Assets - Total Liabilities.

Equity can be defined as the amount of money the owner of an asset would be paid after selling it and any debts associated with the asset were paid off. For example, if you own a home that's worth $200,000 and you have a mortgage of $50,000, the equity in the home would be worth $150,000.

It's also essential to conduct thorough research and due diligence when selecting equity funds while considering the fund's investment strategy, management team, historical performance, and fees. Management fees and loads (commissions) can eat into your returns over time.

Factor investing is the investment process that aims to harvest these risk premia through exposure to factors. We currently identify six equity risk premia factors: Value, Low Size, Low Volatility, High Yield, Quality and Momentum.

Equity is equal to total assets minus its total liabilities. These figures can all be found on a company's balance sheet for a company. For a homeowner, equity would be the value of the home less any outstanding mortgage debt or liens.

The statement that is incorrect regarding equity funding is that 'Equity investors fund the majority of the plans they consider. ' Equity investors, such as venture capitalists and angel investors, are selective and fund only a small portion of the businesses they review.

The objective of an equity fund is generally to seek long-term capital appreciation and/or income from stocks. They may focus on certain sectors of the market or may have a specific investment style, such as investing in value or growth stocks.

Equity finance is generally the issue of new shares in exchange for a cash investment. Your business receives the money it needs and the investor will own a share in your company. This means the investor will benefit from the success of your business.