By purchasing shares in a mutual fund that holds a portfolio of stocks,a person can
A)benefit from fundamental analysis,since the mutual fund requires its shareholders to perform fundamental analysis on their own.
B)benefit from fundamental analysis,since the mutual fund hires one or more individuals to perform fundamental analysis for the fund.
C)eliminate market risk.
D)reduce the standard deviation of his or her portfolio to zero.

Question

Quizplus · Accepted Answer

By purchasing shares in a mutual fund, an individual benefits from fundamental analysis because the mutual fund hires one or more analysts to perform fundamental analysis for the fund. This allows the individual to invest in a diversified portfolio of stocks, without having to perform fundamental analysis on their own. However, market risk cannot be eliminated and reducing the standard deviation of a portfolio to zero is not achievable in practice.

By Purchasing Shares in a Mutual Fund That Holds a Portfolio