What term describes a company that pools money from many people and invests in stocks, bonds, or other assets?

• A. Portfolio
• B. Mutual Fund
• C. Express Trust
• D. Implied Trust

Answer: (B)

Pooling money from many people to invest in stocks, bonds, or other assets describes a mutual fund. A mutual fund is an investment company that sells shares to the public and uses the proceeds to buy a diversified portfolio of securities, with professional management and daily liquidity for investors.

A portfolio, by contrast, is simply the collection of investments owned by an individual or entity; it may be part of a mutual fund, but it isn’t itself an entity that pools funds from many people. An express trust is a legal arrangement where assets are held by a trustee for the benefit of named beneficiaries, not primarily about investing on behalf of a broad pool of investors. An implied trust arises by operation of law based on conduct or circumstances, also not an investment company.

So, the term that best fits a company that pools money from many people and invests in various assets is mutual fund.