Which of the following accurately describe reasons for investing in mutual funds?
I. to effectively control the timing of capital gains for tax purposes
II. to achieve portfolio diversification at a reasonable cost
III. to invest in unfamiliar sectors or geographic regions
IV. to outperform the market

Question

Quizplus · Accepted Answer

II and III are correct because mutual funds offer portfolio diversification at a lower cost than buying individual stocks or bonds directly, and they allow investors to explore sectors or regions they are not familiar with. I is incorrect because mutual funds do not offer investors control over the timing of capital gains distributions. IV is incorrect because there is no guarantee that investing in mutual funds will outperform the market.

Which of the Following Accurately Describe Reasons for Investing in Mutual