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Funds Intermediate:
Growth Mutual Funds
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1.
Growth mutual funds pay few or no dividends because the companies they invest in usually reinvest their profits for more growth.
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True
False
True. Reinvesting profits adds to a companys capitalization.
2.
Stocks that sell below their worth are called _______ stocks.
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Large-cap
Value
Small-cap
Value. Stocks that managers believe are selling for less than they are worth are called value stocks.
3.
Which of the following is a strategy that the manager of an aggressive-growth mutual fund may use to increase the funds value?
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Adding money to it
Frequent buying and selling
Holding onto stocks for a very long time
Buying only safe, registered, and reputable stocks
Frequent buying and selling. This strategy helps the manager avoid the risk that a stock will plunge in value.
4.
What is the objective of growth mutual funds?
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To pay current income
To grow over time
To grow by acquiring other funds
To buy the highest-priced stocks
To grow over time. The objective of growth funds is to grow in value over time. Providing income is not a priority.
5.
The performance of a growth mutual fund depends upon the _______ of the securities it contains.
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Number
Performance
Prices
Performance. A fund is only as good as the investments it contains.
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