All of the following are advantages of using the services of an investment company except:
A. professional management.
B. diversification.
C. ease in selling shares.
D. insurance protection against loss of principal.
D?
Yes. D is right.
To determine the correct answer, let's go through the options one by one and see if they are advantages of using the services of an investment company:
A. Professional management: One of the main benefits of investing through an investment company is that they provide professional management of your investments. They have investment experts who manage portfolios and make investment decisions on your behalf. This can be an advantage as it takes the burden of managing investments off your shoulders. Therefore, this is an advantage of using the services of an investment company.
B. Diversification: Another advantage of investing through an investment company is that they often offer diversified portfolios. Diversification means spreading your investments across different asset classes, sectors, and geographies to reduce risk. By investing in a diversified portfolio, you can potentially increase your chances of earning returns while minimizing the impact of any individual investment's performance. Therefore, diversification is an advantage of using the services of an investment company.
C. Ease in selling shares: Investment companies typically provide liquidity to investors by allowing them to sell their shares easily. This means that investors can convert their investment into cash whenever they need to without any significant restrictions or hurdles. Having ease in selling shares can be advantageous, especially if you need access to your investment funds quickly. Therefore, this is also an advantage of using the services of an investment company.
D. Insurance protection against loss of principal: Insurance protection against loss of principal is not typically offered by investment companies. This type of protection typically falls under the purview of insurance companies, not investment companies. It is important to note that while investment companies may offer various risk management strategies, they generally do not provide insurance protection against loss of principal. Therefore, option D, insurance protection against loss of principal, is the correct answer.