The correct answer is: D. None of the above is correct.
Mutuality and diversification are both important concepts in investing. Mutuality means that funds from various individuals are combined to create a larger investment pool. This can provide investors with access to investments that they would not be able to afford on their own, and it can also help to reduce risk by spreading out investments across a variety of assets. Diversification means spreading out funds to various destinations in order to reduce risk. This can be done by investing in different asset classes, different sectors of the economy, or different countries.
Both mutuality and diversification can help investors to achieve their financial goals. Mutuality can provide access to investments that would not be available otherwise, and diversification can help to reduce risk. However, it is important to note that both mutuality and diversification do not guarantee success. Investors should always do their own research before making any investment decisions.
Here is a brief explanation of each option:
- Option A: 1. Mutuality means funds from various individuals are combined.
This is correct. Mutuality is the pooling of funds from multiple investors to create a larger investment pool. This can provide investors with access to investments that they would not be able to afford on their own, and it can also help to reduce risk by spreading out investments across a variety of assets.
- Option B: 2. Diversification means spreading out funds to various destinations.
This is also correct. Diversification is the process of spreading out investments across a variety of assets, sectors, or countries in order to reduce risk. By diversifying, investors can reduce their exposure to any one asset or sector, which can help to protect their portfolio from losses.
- Option C: Both A & B
This is incorrect. Both mutuality and diversification are important concepts in investing, but they are not mutually exclusive. In fact, they can be used together to create a more well-rounded investment portfolio.
- Option D: None of the above is correct
This is the correct answer. Both mutuality and diversification are important concepts in investing, and they can both be used to help investors achieve their financial goals.