The primary advantage of mutual funds is that they
A)always provide the highest return.
B)always allow people to "beat the market."
C)allow people to diversify and reduce risk.
D)allow people to diversify,which increases risk and return.

Question

Quizplus · Accepted Answer

Mutual funds allow people to diversify their portfolio by investing in a variety of assets and securities, such as stocks, bonds, and commodities. This diversification helps to reduce risk by spreading out investments across different industries and reducing exposure to any single company or asset. This is one of the primary advantages of mutual funds, as investors can benefit from the potential returns of multiple investments while minimizing the risk of individual losses. Mutual funds do not always provide the highest return or allow people to consistently beat the market. Additionally, diversification does not increase risk, but rather helps to mitigate it.

The Primary Advantage of Mutual Funds Is That They