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Applications of Finance: (Loan (Examples (Credit cards, personal loans,…

- - - - Each repayment is interest only. Entire principal is due upon maturity
    - - Each repayment has interest and principal, but at the end there is a loan principal balance to be paid off
    - - Each repayment has interest and the principal
    - - Interest cost of the loan is fixed, usually over a term of 1-5 years
    - - Interest cost is subject to change depending on price credit and OFC changes
- - - - Allows more diverse range or assets and strategies
    - - A the minimum capital required by many funds is easily affordable.
    - - Making them highly liquid, where capital ca be redeemed quickly, easily and cheaply
  - - - Capital invested may be redeemed at any time
    - - Restrictions on capital redemptions
- - - - Active Management
        
        'Outperform' the market by trading between asset classes and individual investments
        
        maximises fund returns
        
        Key attributes; market timing and asset selection
      - Passive management
        
        Buy and hold strategy
        
        An object is to follow or mimic the market
- - - - Converted to multiple shares that are serviced with the cash flows of the assets