BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Certificate of Deposit (CD)
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Mutual Fund
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Single Stocks
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Detailed explanation-1: -Key Takeaways Mutual funds offer diversification or access to a wider variety of investments than an individual investor could afford to buy. There are economies of scale in investing with a group. Monthly contributions help the investor’s assets grow. Funds are more liquid because they tend to be less volatile.
Detailed explanation-2: -Diversification in equity mutual funds comes with investing across sectors and market capitalisation. Diversification is also done with multiple mutual funds in a portfolio. It helps in reducing the risk in a portfolio.
Detailed explanation-3: -Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they’re professionally managed.
Detailed explanation-4: -For example, simple, low-cost, “set it and forget it” ETFs or mutual funds-especially index funds and target-date funds-can get a portfolio diversified quickly and safely while reducing risk. Robo-advisors are another option that can help with portfolio diversification.