Final answer:
C)fund has experienced net redemptions of shares.
The net asset value per share for a mutual fund is expected to decrease if the fund has distributed dividends to shareholders.
Events like the issuers in the portfolio paying dividends or net redemptions of shares don't necessarily reduce the NAV per share, and an appreciation in portfolio securities would typically increase it.
Step-by-step explanation:
The net asset value (NAV) per share for a mutual fund can be expected to decrease if the fund has made dividend distributions to shareholders.
When a fund distributes dividends, the total assets decrease because the cash is paid out, subsequently reducing the NAV per share.
However, if the issuers in the mutual fund's portfolio pay dividends, or if the fund experiences net redemptions of shares, the NAV per share doesn't necessarily reduce as these events do not directly reduce the fund's total net assets.
Likewise, if the securities in the portfolio have appreciated in value, it would typically increase the NAV per share.
Diversification is key in a mutual fund's strategy to minimize the impact of individual security fluctuations.
Investors trust in mutual funds to manage risks and navigate through market ups and downs like the ones experienced during the early 2000s, especially during 2008 when stock funds faced significant declines.
A mutual fund provides a return based on its overall performance, and funds like index funds are designed to mimic the behavior of broader market indices such as the Standard & Poor's 500.