📚 General Knowledge

What is the primary advantage of investing in a mutual fund compared to buying individual stocks?

A Guaranteed returns and no risk of losing money.
B Professional management and diversification across many securities.
C Lower fees than buying individual stocks directly.
D Immediate voting rights in all companies held by the fund.

✓ Correct Answer: Option B

Mutual funds pool money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities, offering professional management and instant diversification, which helps reduce risk compared to owning just a few individual stocks.

💡 Why is B) the correct answer?

The correct answer to the question "What is the primary advantage of investing in a mutual fund compared to buying individual stocks?" is Option B: Professional management and diversification across many securities..

The other options — A) Guaranteed returns and no risk of losing money., C) Lower fees than buying individual stocks directly., D) Immediate voting rights in all companies held by the fund. — are incorrect for this General Knowledge question. As explained above: Mutual funds pool money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities, offering professional management and instant diversification, which helps reduc…

📚 About This General Knowledge Practice Question

This 3-level General Knowledge question from the Abbreviations & Full Forms topic is part of One Paper Preparation's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free General Knowledge practice test or use flashcards for spaced repetition review.

Related General Knowledge Questions