Multiple choice

Investing through mutual fund is a better option than investing directly in the stock market because

  1. identifying stocks is a difficult process

  2. agents get commissions on mutual fund investment

  3. returns are guaranteed by mutual funds

  4. All of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Mutual funds provide professional fund managers who research and select stocks, which is especially valuable for individual investors who lack the time or expertise to analyze companies. Option A correctly identifies this key advantage. Option B is incorrect because commissions apply to both mutual funds and direct stock purchases through brokers. Option C is false because mutual funds do not guarantee returns - their performance depends on the underlying securities. Therefore Option D (All of the above) is also incorrect.

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