Why Do Many Mutual Funds Now Offer Three Different Classes

question 46

Essay

Why do many mutual funds now offer three different classes of shares? What are the differences and what should you consider in choosing the classes?

Discuss the consequences of various cognitive errors in investment and financial planning.

Identify strategies to mitigate the impact of behavioral biases in financial decisions.

Understand the concept of myopic loss aversion and its implications in decision-making.

Comprehend the nature and effects of recency bias on judgements and decisions.

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Definitions:

Per Capita Growth Rate

Refers to the rate of population growth per individual within a given time frame, often used to assess changes in population size relative to the current population.

Exponential Growth Rate

Exponential Growth Rate describes the increase of a quantity by a consistent rate over proportional time intervals, commonly observed in populations lacking resource limitations.

Biotic Potential

The maximum reproductive capacity of an organism under optimal environmental conditions, reflecting the potential for population growth.