Final answer:
Mutual funds are organizations that allow investors to purchase a diversified group of stocks or bonds. Investors buy shares of a mutual fund and receive a return based on the fund's overall performance. Mutual funds can have different focuses and some aim to mimic the stock market's performance.
Step-by-step explanation:
Mutual funds are organizations that offer a simplified way for investors to purchase a diversified group of stocks or bonds. These funds consist of a variety of stocks or bonds from different companies. When an investor buys shares of a mutual fund, they receive a return based on how the fund as a whole performs. Mutual funds can have different focuses, such as investing in specific regions or industries. Some mutual funds aim to mimic the overall performance of the stock market and are known as index funds.