Question

Select the correct answer.

Which statement defines a mutual fund?
A a group of investments that many individual investors hold in common
B a contract purchased from an insurance company
C an ownership interest in a company

Answer 1

A mutual fund is a company that sells stock to investors and invests the money in stocks and bonds. It allows people to diversify their investments without taking too much risk.

Step-by-step explanation:

A mutual fund is a company that sells stock in itself to individual investors and then invests the money it receives in stocks and bonds issued by other corporations. Mutual fund stockholders receive dividends earned from the mutual fund's investment. Stockholders can also sell their mutual fund shares for a profit just like other stocks.

Mutual funds allow people to diversify without taking too much of a risk. The mutual fund company's assets are calculated by taking the net value of the mutual fund and dividing it by the number of shares issued by the mutual fund to find its market value.