Jonathan is a fifty-year-old construction-site foreman who invests money with a firm that, in turn, pools it with other investor dollars and invests the money in well-diversified securities, managed by an investment professional within the firm. In this scenario, Jonathan is investing in a(n)

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In this scenario, Jonathan is investing in a mutual fund, which pools individual investor dollars and invests them in large numbers of well-diversified securities. Individual investors buy shares in a mutual fund in the hope of earning a high rate of return and in much the same way as people buy shares of stock. Because of the large numbers of people investing in any one mutual fund, the funds can afford to invest in hundreds (if not thousands) of securities at any one time, minimizing the risks of any single security that does not do well.

Jonathan Is a Fifty-Year-Old Construction-Site Foreman Who Invests Money with a Firm