Multiple choice

Mutual funds offer the advance of portfolio diversification. This is best expressed by the statement:

  1. Do not keep all eggs in one basket

  2. One bird in hand is better than two in the bush

  3. What goes up, must come down

  4. Risk and return always go hand in hand
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A Correct answer
Explanation

The 'don't keep all eggs in one basket' metaphor perfectly captures the essence of portfolio diversification - spreading investments across different assets reduces risk. The other options are different idioms: 'one bird in hand' suggests certainty over potential gain, 'what goes up must come down' refers to cycles, and 'risk and return go hand in hand' describes a tradeoff relationship.

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