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Corporate Financial Policy Coursework 2008 Q1. By Ravi Waghela Q1a) Portfolio management is the process of managing assets of a mutual fund, including choosing and monitoring appropriate investments and allocating funds accordingly. A mutual fund is an open-ended fund managed by an investment company which raises money from shareholders and invests in a group of assets. Mutual funds raise money by selling shares to the public. 1 In return for the money, shareholders receive an equity position in the fund and, in effecting each of its underlying securities. Investors often hold more shares in more than one company and there are two approaches to portfolio management. The two types are: * Active * Passive Maximising the expected utility of the excess return over a chosen benchmark is known as active portfolio management, whilst passive portfolio management just tracks the benchmark. The simplest example of passive management is the index fund that is designed to replicate exactly a well-defined index of common stock,...

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