Question : Statement 1: Mutual funds pool funds from various investors to invest in a diversified portfolio.
Statement 2: Mutual funds only invest in a single type of financial instrument.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
Correct Answer:
Statement 1 is true, but statement 2 is false.
Solution : The correct answer is (b) Statement 1 is true, and statement 2 is false.
Statement 1 is true. Mutual funds pool money from multiple investors and use those funds to invest in a diversified portfolio of stocks, bonds, or other financial instruments.
Statement 2 is false. Mutual funds typically invest in a variety of financial instruments to achieve diversification and manage risk for their investors. They often have a mix of stocks, bonds, money market instruments, and sometimes other asset classes in their portfolios.
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