Final answer:
The primary difference between an open-end and a closed-end investment company is diversification. This allows the fund to vary in size and hold a diversified portfolio of securities.
Step-by-step explanation:
The primary difference between an open-end and a closed-end investment company is C) diversification. Open-end investment companies, also known as mutual funds, continuously issue and redeem shares based on investor demand. This allows the fund to vary in size and hold a diversified portfolio of securities. In contrast, closed-end investment companies have a fixed number of shares that trade on an exchange and their portfolio is not actively managed or diversified.