Exploring the World of Mutual Funds

Understanding Mutual Funds and Dollar Cost Averaging

54.0% complete question: Marge has been dollar cost averaging in a mutual fund by investing $2,000 at the beginning of every quarter for the past 7 years. She has been earning an average annual compound return of 11% compounded quarterly on this investment.

How much is the fund worth today?

To calculate the current value of Marge's mutual fund investment, we can use the formula for compound interest: A=P*(1+r/n)^(n*t). After calculation, the current value of Marge's mutual fund investment is approximately $4,469.70.

What is a Mutual Fund?

A mutual fund is a type of investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities, such as stocks, bonds, or other assets. It is managed by a professional fund manager or a team of managers who make investment decisions on behalf of the investors.

Key Features of Mutual Funds

Mutual fund shares are generally redeemable on any business day, allowing investors to buy or sell their shares at the fund's net asset value (NAV) at the end of the trading day.

Do you have any experience investing in mutual funds or other types of investment vehicles?