An investor most values portfolio diversification in a mutual fund bec…

Question

An investor most values portfolio diversification in a mutual fund because it helps

Accepted Answer

B. {'text': 'Reduce the risk of losing across all holdings at once', 'label': 'B'}

1. Diversification spreads investment across many securities and sectors.
2. This lowers the chance that all holdings lose value at the same time.
3. Mutual funds achieve broad diversification even for small ticket sizes.
4. Returns are still market-linked; diversification reduces risk but does not guarantee gains.
_Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.1.5_

Answer

{'text': 'Guarantee a positive return in every calendar year', 'label': 'A'}

Answer

{'text': 'Remove the need to appoint a professional fund manager', 'label': 'C'}

Answer

{'text': 'Raise the face value of each mutual fund unit issued', 'label': 'D'}