Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
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.
3.
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.
4.
Big fund families generally offer a range of funds to choose from.
True. Though it's not guaranteed, as a general rule big fund families do offer a range of funds.
5.
Why might your first fund be one that favors large companies?
Because these funds tend to be less volatile than funds owning smaller companies. Funds that own large companies, in general, may not be higher returning or cheaper, but they tend to be steadier investments than those owning smaller companies.
