What is the primary advantage of mutual funds?
A) They usually make a return that "beats the market."
B) They allow people with small amounts of money to diversify.
C) They provide customers with a medium of exchange.
D) They allow investing in the venture capital industry.

Question

Quizplus · Accepted Answer

The primary advantage of mutual funds is that they allow people with small amounts of money to diversify their investments. This is because mutual funds pool money from many investors, which is then used to buy a diversified portfolio of stocks, bonds, or other securities. This would not be possible for an individual investor with limited funds, who would likely have to buy only a small number of securities, thereby exposing themselves to greater risk. Mutual funds also offer professional management, liquidity, and convenience. However, they do not usually make a return that "beats the market" and do not allow investing in the venture capital industry. Mutual funds are not a medium of exchange, although they may be bought and sold on an exchange.

What Is the Primary Advantage of Mutual Funds