Which statement best defines a mutual fund?
A) It is a financial market where small firms agree to sell stocks and bonds to raise funds.
B) It is a fund set aside by a local government to lend to small firms who want to invest in projects that are beneficial to the firm and community.
C) It is an institution that sells stocks and bonds on behalf of small and less known firms who would otherwise have to pay high interest to obtain credit.
D) It is an institution that sells shares to the public and uses the proceeds to buy a selection of various types of stocks and bonds.

Question

Quizplus · Accepted Answer

A mutual fund is an institution that pools money from multiple investors and uses the proceeds to buy a selection of various types of stocks, bonds, or other securities. The investors then own shares in the mutual fund, which can be bought or sold on the open market. Mutual funds offer diversification and professional management to individual investors who might not have the time or expertise to manage their own portfolios.

Which Statement Best Defines a Mutual Fund