As a small investor,Bernie Lo has decided to invest in the Alpha Fund.This mutual fund only invests in the common stock of companies located in the United States.What is one benefit of investing in mutual funds?

Question

Quizplus · Accepted Answer

Investing in mutual funds typically offers more diversification than investing in individual stocks, as a mutual fund is made up of a portfolio of securities from multiple companies. This can help spread out risk and potentially offer more stable returns over time. However, capital gains taxes will still apply to any profits earned from selling mutual fund shares. Mutual funds are also not guaranteed by the SEC.

As a Small Investor,Bernie Lo Has Decided to Invest in the Alpha