Which among the following is true of mutual funds?
They make loans to businesses, requiring their borrowers to pledge assets such as equipment, inventories, or unpaid accounts as collateral for the loans.
They are businesses that protect their clients against financial losses from certain specified risks in exchange for a fee, called a premium.
They are firms that buy and sell stocks, bonds, and other securities for their customers and provide other financial services.
They pool individual investor dollars and invest them in large numbers of well-diversified securities.
They are businesses that offer short-term loans at substantially higher rates of interest than banks.
Answer: They pool individual investor dollars and invest them in large numbers of well-diversified securities.