Question

Dan has $6,000 that he would like to invest. He wants to diversify his investment, but feels that $6,000 isn't enough to buy many different securities. Besides, he doesn't know much about picking stock and doesn't want the hassle of trying to make investment decisions. Dan is likely to find mutual funds an attractive way to invest his $6,000.

Answer 1

Mutual funds are an attractive way for Dan to invest his $6,000 because they allow him to diversify his investment and reduce risk. By buying mutual fund shares, Dan can leave the investment decisions to professionals and receive a return based on the overall performance of the mutual fund.

Step-by-step explanation:

Dan is likely to find mutual funds an attractive way to invest his $6,000. Mutual funds are a type of investment that consists of a variety of stocks or bonds from different companies. By buying mutual fund shares, Dan can diversify his investment and reduce the risk associated with investing in just one or a few securities. He will receive a return based on how the mutual fund as a whole performs, which can be a more convenient and hassle-free option for someone who doesn't have much knowledge or time to pick individual stocks.