Scenario 34: What is the main advantage of investing in a mutual fund compared to buying individual stocks and bonds?

Question: Scenario 34: What is the main advantage of investing in a mutual fund compared to buying individual stocks and bonds?

Answer options:

• Guaranteed returns.
• Lower fees. ✅ Professional management and diversification.
• Complete control over individual security selection.

Correct answer: Professional management and diversification.

Explanation: Mutual funds offer professional management by experienced fund managers and provide diversification across many securities, which helps reduce risk compared to investing in a few individual securities. Returns are not guaranteed, and fees are charged. The correct answer is "Professional management and diversification.". This capacity-fill scenario 34 reinforces the same competency for the ific bank and follows the certified explanation standard.