Mutual funds
A)provide diversification.Shareholders assume all of the risk associated with the mutual fund.
B)provide diversification.Government insurance eliminates the risk of mutual fund shareholders.
C)do not provide diversification.Shareholders assume all of the risk associated with the mutual fund
D)do not provide diversification.Government insurance eliminates the risk of mutual fund shareholders.

Question

Quizplus · Accepted Answer

Mutual funds provide diversification by pooling money from multiple investors to purchase a variety of stocks, bonds, or other securities. This diversifies the investment portfolio and reduces the risk of any one investment dragging down the entire portfolio. However, shareholders do assume all of the risk associated with the mutual fund as returns are not guaranteed and can fluctuate with market conditions.

Mutual Funds