A stock mutual fund is generally
A) less risky than buying individual stocks.
B) more risky than buying individual stocks.
C) just as risky as buying individual stocks.
D) a way for the rich to avoid taxes.

Question

Quizplus · Accepted Answer

A stock mutual fund is generally less risky than buying individual stocks because it is diversified. This means that it holds a variety of stocks, reducing the impact of any one stock performing poorly. Additionally, experienced fund managers often manage the stocks within the fund, which can further reduce risk.

A Stock Mutual Fund Is Generally