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What is the Cost of Carry Model and Why Investors Should Know About It?

The cost of carrying refers to the expenses incurred in owning and holding an asset. When you own an asset like stocks, land, or gold, you need to pay certain costs such as interest, storage fees, insurance, or other expenses associated with holding that asset over time. The cost of carrying is the difference between these expenses and the profits you earn from that asset. Essentially, it's the total cost of keeping the asset in your possession and the financial impact it has on your overall investment returns.   What is the Cost of carrying and Arbitrage? The cost of carrying or carry cost is the extra amount of money you need to spend to keep or hold onto an asset or investment. It can mean different things depending on the market you are involved in. This cost has a significant impact on trading demand and can even create opportunities for making profits through arbitrage. Arbitrage: The definition of cost of carry would be incomplete without the term arbitrage. So now ...

How to Invest in Mutual Funds?

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  What is a Mutual Fund? Mutual funds are like a pool of money collected from many people who have a similar goal of investing. This money is then managed by professionals called fund managers who decide where to invest it. The advantage for individual investors is that they do not have to worry about selecting and managing investments themselves. Mutual funds offer a diverse mix of investments, such as bonds, stocks, and debentures, to help balance the risks and potential returns. The income earned from these investments is distributed among the investors based on how much money they have put into the fund. So, it is a way for busy individuals to invest their money and potentially earn returns without having to actively manage their investments. How to invest in Mutual Funds? Investing in mutual funds can be done by following a simple method: Understand your investor profile: Determine your risk tolerance level and investment goals. This will help you decide how much mo...