Business 12th Edition by William Pride,Robert Hughes,Jack Kapoor

Exercise 3

DEVELO PING CRITICAL-THINKING SKILLS
One way to achieve financial security is to invest a stated amount of money on a systematic basis. This investment strategy is called dollar-cost averaging. When the cost is lower, your investment buys more shares. When the cost is higher, your investment buys fewer shares. A good way to begin investing is to select a mutual fund that meets your financial objectives and to invest the same amount each month or each year.
Assignment
1. Select several mutual funds from the financial pages of the Wall Street Journal or a personal finance periodical such as Money, Kiplinger's Personal Finance, or SmartMoney that provides information about mutual funds. Call the toll-free number for each fund and ask about its objectives. Furthermore, request that the company send you a prospectus and an annual report.
2. Select one fund that meets your financial objectives.
3. Prepare a table that includes the following data:
a. An initial investment of $2,000 in the mutual fund you have selected
b. The net asset value (NAV )
c. The number of shares purchased
4. Record the investment information on a weekly basis. Look in the Wall Street Journal or on the Internet to find the NAV for each week.
5. Determine the value of your investment until the end of the semester.
6. Write a report describing the results. Include a summary of what you learned about investments. Be sure to indicate if you think that dollar-cost averaging (investing another $2,000 next year) would be a good idea.