Explain what an exchange traded index fund

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Question - Short term investments have an important role to play in personal financial management. Briefly discuss two advantages and two disadvantages of short-term investments as part of an investor portfolio.

Your friend was hoping to make money investing in well-known companies shares that he thinks are going to outperform the market. He buys and sells shares on a very frequent basis. Unfortunately, since he began following this approach, he has lost 20% of his money. You suggest to your friend that he may be better off if he invests in an Exchange Traded index fund.

Required - Explain what an Exchange Traded index fund is.

Discuss two reasons why an investment in an Exchange Traded index fund is better than the approach your friend has previously followed.

Reference no: EM132818911

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