5-3 Mutual funds achieve economies of scale for individual investors by realizing the benefits of lower transaction costs and commissions as compared to those incurred by individual investors.

Question

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Mutual funds pool together money from multiple investors, which allows for larger trades and negotiation of lower transaction costs and commissions with brokers. This translates to lower expenses for individual investors who participate in the mutual fund.

5-3 Mutual Funds Achieve Economies of Scale for Individual Investors