02-22-2010, 02:54 AM
Dear
What a mutual fund is investing in is not something that decides what character the securities of mutual fund itself have. You are discussing the characteristic of assets that mutual fund might be investing in. Question has no linkage with it; rather it focuses how the mutual fund's own securities can be realized.
We don't have to see how mutual fund will realize its investment. We are not going to treat a mutual fund as non going concern to evaluate how mutual fund will dispose of its investment and distribute its total realized assets to unitholders and eventually will be dissolved. Even if this happens, the unitholder of mutual fund can neither assess what amount he will get and how much time it will take.
So, case is being evaluated on going concern basis.
In case of close end funds there is entirely no question or bearing that you are making. On other hand I have already explained why open end fund's units cannot be treated as cash equivalent.
One advice to be taken positively; if you are an accounting student you may go to the depth, but if not, you may try to grasp basics but don't try technical things. These will create confusions for readers.
Regards,
Kamran.
What a mutual fund is investing in is not something that decides what character the securities of mutual fund itself have. You are discussing the characteristic of assets that mutual fund might be investing in. Question has no linkage with it; rather it focuses how the mutual fund's own securities can be realized.
We don't have to see how mutual fund will realize its investment. We are not going to treat a mutual fund as non going concern to evaluate how mutual fund will dispose of its investment and distribute its total realized assets to unitholders and eventually will be dissolved. Even if this happens, the unitholder of mutual fund can neither assess what amount he will get and how much time it will take.
So, case is being evaluated on going concern basis.
In case of close end funds there is entirely no question or bearing that you are making. On other hand I have already explained why open end fund's units cannot be treated as cash equivalent.
One advice to be taken positively; if you are an accounting student you may go to the depth, but if not, you may try to grasp basics but don't try technical things. These will create confusions for readers.
Regards,
Kamran.
