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Questions and Answers
What is a mutual fund?
What is a mutual fund?
- A type of investment that pools money from many investors to buy stocks, bonds, or other securities (correct)
- A government-issued financial instrument for retirement savings
- A type of loan provided by a bank to individual investors
- An insurance policy that guarantees a fixed return on investment
What is the primary purpose of a mutual fund?
What is the primary purpose of a mutual fund?
- To offer guaranteed returns on investment
- To provide a way for individual investors to diversify their investment portfolio (correct)
- To provide short-term loans to businesses
- To insure investors against market fluctuations
How are mutual fund returns typically generated?
How are mutual fund returns typically generated?
- Through guaranteed returns provided by the government
- Through a combination of dividends, interest, and capital gains from the securities in the fund's portfolio (correct)
- Through direct loans to individuals and businesses
- Through fixed interest payments from the mutual fund management company
