Choose wisely. There is only one correct answer to each question.
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1.
Which could make the best first fund?
One that owns 100 stocks from various sectors. For most people, one's first fund should be one that owns a significant number of stocks from a variety of industries.
2.
Because fund families tend to have a lot of funds in them, you are assured of finding plenty of diversity to choose from.
False. Many fund families specialize in one type of fund, for example, large-growth funds. A big family isn't always a guarantee of diversity.
3.
Which type of large-company fund generally makes the best first fund?
Large blend. Blend funds own stocks with both value and growth characteristics and typically don't favor particular sectors over others. They therefore offer more diversification than most large-value or large-growth funds do.
4.
Why might a concentrated fund not be a wise idea for a beginning investor's first fund?
They tend to be more volatile than well-diversified funds. As a rule, beginning investors might find well-diversified funds more suitable because they are less volatile.
5.
Which is not a reason for buying your first fund through one of the big fund families?
Because their funds are always the best performers. Most of the big fund families are reliable and offer a wide range of solid funds--but they aren't always chart-toppers.
