The correct answer is option D.
The mutual fund raises funds by selling its very own shares to investors, who pool their funds to buy a portfolio of stocks, bonds, and short-term money market instruments.
What is mutual funds?
- A mutual fund is a collection of money that is professionally managed by a Fund Manager. It refers to a trust that generates revenue from a group of investors with similar investment goals and invests it in stocks, bonds, money market instruments, and/or other securities.
- A mutual fund is a type of investment vehicle which facilities money from investors who share a common investment goal. Depending on the scheme's objectives, it then invests the funds in various asset classes such as equities and bonds.
- These investments are made on behalf of the investors by an asset management company (AMC).
- Mutual funds make money primarily through sales charges that function similarly to commissions and therefore by charging investors a proportion of the assets under management (AUM). A fund is required by the Securities and Exchange Commission (SEC).
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