Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
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.
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.
Why could it be a bad idea to buy a single-sector fund as your first fund?
Such funds are volatile. Funds focusing on only one area of the market are not necessarily poor performers or more expensive, but they tend to be less stable than funds owning stocks from various industries.
5.
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.
