Choose wisely. There is only one correct answer to each question.
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1.
What is not something funds typically do to handle asset growth?
Own fewer stocks. Funds can close or change their strategies when faced with too many assets, or the fund managers may hold cash or buy more stocks.
2.
Why is a large mutual fund's asset size most likely to be in the form of large-cap companies?
Large-cap funds make up the majority of the size of the market. Large cap funds make up about two thirds of the market.
3.
When it comes to buying stock for itself, the larger a fund is, the _______ it will be to boost a stock's share price.
More likely. It will help boost a stock's share price simply by bidding on its shares, and the larger the fund is, the bigger the effect will be.
4.
Once a fund closes, it does not take in any more investments from existing shareholders.
False. Many funds do actually continue to take in new investments from their existing shareholders after they close.
5.
If you're a mutual fund investor concerned about asset growth, what should you do?
Favor funds with low turnover rates. The less a fund trades, the lower its trading cost. Aggressive, fast-trading funds will only be hurt more by asset growth. And by avoiding all small-company funds, you're missing out on a large part of the market.
