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1.
A socially responsible investing fund might engage in shareholder activism within companies it owns because _______.
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It wants to change policies it disagrees with. A perfectly ethical company is a rarity; thus, a SRI fund might use activism to mold its companies to its wishes.
2.
Which of the following investments would a socially responsible investing fund most likely accept in its portfolio?
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A grape grower. Of the four choices, this one is the least objectionable. (Where the grapes end up is, of course, another matter.)
3.
Shareholder activism is a key for _______.
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Some SRI funds. Some SRI funds engage in shareholder activism to reform companies. Others simply shun those companies.
4.
A socially responsible investing fund _______.
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Might own an oil company. Although generally considered to be unfriendly to the environment, an oil company could be held in an environmentally concerned SRI fund if that fund takes a relative approach. That's why it's important to understand how a fund's screens work.
5.
Because of their ethical criteria, socially responsible funds outperform the average mutual fund.
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False. The results are not uniform. While some funds do outperform the average, there are many that either match it or do worse.