Some People Argue That There Are Two Advantages to Holding

question 14

Multiple Choice

Some people argue that there are two advantages to holding mutual funds.The first is that mutual funds provide an inexpensive way to hold a diversified portfolio.The second is that because of their expertise mutual fund managers should be able to consistently beat the market.Which of the following does the evidence show?

• A)Diversification does reduce risk and mutual funds typically outperform the market.
• B)Diversification does reduce risk,but mutual funds do not typically outperform the market.
• C)Diversification does not reduce risk but mutual funds typically outperform the market.
• D)Diversification does not reduce risk and mutual funds do not typically outperform the market.

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