How do mutual funds typically handle liquidity?

Mutual funds typically provide daily liquidity, allowing investors to buy or redeem shares based on the net asset value (NAV) determined at the end of each trading day. This means that investors can access their funds quickly and easily, without long waiting periods, making mutual funds an attractive investment vehicle for those who value the ability to enter and exit the market without significant delays.

The ability to transact daily is a key feature of mutual funds that contrasts with other investment vehicles, such as certain alternative investments or fixed-term products, which may have more restrictive liquidity provisions. This daily redemption capability ensures that investors can respond to changing market conditions or personal financial needs conveniently.

In addition, the valuation of mutual fund shares based on daily NAV ensures a fair and transparent pricing mechanism for buy and sell transactions, fostering trust among investors. This structure aligns well with the liquidity needs of most individual investors, which is why option B is the correct choice.