Which of the following is TRUE regarding mutual funds?

Mutual funds are investment vehicles that pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. The correct statement is that mutual funds' values fluctuate with market conditions. This means that the price of mutual fund shares can rise or fall based on the performance of the underlying investments within the fund, as well as broader market trends.

Investors in mutual funds are aware that their returns are subject to market risks; thus, the net asset value (NAV) of the fund can change daily. This inherent fluctuation is a fundamental characteristic of mutual funds and reflects their exposure to the market.

In contrast to this, some of the incorrect options suggest concepts that are misleading or overly simplistic. For example, the notion that mutual funds guarantee returns regardless of market conditions is inaccurate, as no mutual fund can assure investors of fixed returns, especially when market conditions are volatile. Similarly, the idea that investments with higher returns always involve less risk does not hold true, as higher potential returns often come with higher inherent risk. Lastly, the statement about shares always being sellable at the purchase price overlooks the reality that market prices can change, and investors may have to sell shares at a price lower than their original purchase price depending on market conditions