Question

Which of the following is a reason someone might buy a mutual fund (SELECT ALL THAT APPLY)? They are more risky than stocks. Mutual fund managers save you time by providing the research for you. They are more diverse than a single stock. Mutual funds are expensive-which usually means they are a good investment.

Answer 1

The reasons someone might buy a mutual fund from the options provided are:

1. **Mutual fund managers save you time by providing the research for you.** - This is a valid reason, as mutual funds are typically managed by professionals who conduct the necessary research and analysis.

2. **They are more diverse than a single stock.** - This is also a valid reason. Mutual funds often invest in a variety of assets, which can help to spread out and reduce risk compared to investing in a single stock.

The other statements are not accurate reasons for buying a mutual fund:

- **They are more risky than stocks.** - This is generally misleading. While there are some mutual funds that can be risky, many mutual funds are designed to reduce risk through diversification compared to investing in individual stocks.

- **Mutual funds are expensive - which usually means they are a good investment.** - This statement is also misleading. High costs do not necessarily correlate with better investment performance. In fact, many investors prefer low-cost index funds that have lower fees.

So, the correct answers are:
- Mutual fund managers save you time by providing the research for you.
- They are more diverse than a single stock.