21-3 What are some of the differences between individual investors and institutional
investors?
There are several differences between individual and institutional investors. Firstly,
institution investors refer to professional money managers, including bank trust departments,
insurance companies, mutual, and pension funds, who are usually publicized in the mainstream
media. One of their defining features is that they oversee large amounts of fund on behalf of
individual investors. Moreover, individual investors can easily exploit some investment
opportunities, such as a spin-off, which are unavailable to institutional investors.
21-6 Why is the asset allocation decision the most important decision made by investors?
Asset allocation is one of the most important investment decisions. It involves choosing a
mix of assets that maximizes the value of an investor. This is largely because there is a whole
