Question

Mutual funds Group of answer choices provide diversification. Shareholders assume all of the risk associated with the mutual fund. provide diversification. Government insurance eliminates the risk of mutual fund shareholders. do not provide diversification. Shareholders assume all of the risk associated with the mutual fund do not provide diversification. Government insurance eliminates the risk of mutual fund shareholders.

Answer 1

Answer:

The correct answer is letter "A": provide diversification. Shareholders assume all of the risk associated with the mutual fund.

Explanation:

Mutual funds are pools of assets that allow small investors to have a diversified portfolio which reduces risks in their investments. Mutual funds are typically managed by professionals who charge a high fee for their services which reduces the investors' net profit.

Even if mutual funds are managed by professionals, it does not guarantee investors will end up with earnings and, in front of losses, investors assume the whole risk.