Question

Why might a mutual fund be a better investment than individual stocks and bonds?

Answer 1

The correct answer is C) risk is diversified with a mutual fund.

A mutual fund might be a better investment than individual stocks and bonds because the risk is diversified with a mutual fund.

A mutual fund is an instrument that allows you to invest your money in a pool of money that is collected from many people investing in the same fund. It could be an investment in stock, money market, or bonds.

The advantages of a mutual fund over individual stocks are that diversification. The money is allocated in different securities. Another one could be that professionals manage the money and know what to do with it and in what time. The risk is diversified and you can cash your money out when you want.