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1.
The Acme Internet Enterprise Fund, which is an up-and-coming Internet mutual fund, is likely to be a sector fund.
True. According to its name, it invests in one area of the marketthe Internet.
2.
How do the managers of growth mutual funds enable their funds to grow in value?
They invest in the stocks of companies they believe will outperform the market average. They believe there is a demand for these stocks, which will increase in price.
3.
Large-cap companies are popular choices for growth mutual funds.
False. Although they may be included, they are not as frequently chosen as small-caps and mid-caps are. These latter companies generally have more room to grow than large-caps do.
4.
Growth mutual funds pay few or no dividends because the companies they invest in usually reinvest their profits for more growth.
True. Reinvesting profits adds to a companys capitalization.
5.
Growth funds seek to grow for the short term.
False. Even though they try to earn large profits quickly, growth funds seek to grow over long periods.