ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Its price doesn’t change much.
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It offers diversity in investment.
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It has a set maturity date.
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It can be sold at a profit.
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Detailed explanation-1: -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.
Detailed explanation-2: -Diversification. Mutual funds give you an efficient way to diversify your portfolio, without having to select individual stocks or bonds. They cover most major asset classes and sectors.
Detailed explanation-3: -Diversification means lowering your risk by spreading money across and within different asset classes, such as stocks, bonds and cash. It’s one of the best ways to weather market ups and downs and maintain the potential for growth.
Detailed explanation-4: -Balanced funds invest in a hybrid of asset classes, whether stocks, bonds, money market instruments, or alternative investments. The objective of this fund, known as an asset allocation fund, is to reduce the risk of exposure across asset classes.
Detailed explanation-5: -Mutual funds offer investors a great way to diversify their holdings instantly. Unlike individual stocks, investors can put a small amount of money into one or more funds and access a diverse pool of investment options as a single mutual fund may be comprised of dozens of different securities.