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1.
What is the objective of growth mutual funds?
To grow over time. The objective of growth funds is to grow in value over time. Providing income is not a priority.
2.
Which of the following is a strategy that the manager of an aggressive-growth mutual fund may use to increase the funds value?
Frequent buying and selling. This strategy helps the manager avoid the risk that a stock will plunge in value.
3.
Growth mutual funds rarely make the list of top ten funds from one year to the next because _______.
They are very volatile. They may not perform as well as "top ten" funds every year, but over the course of many years, they show steady growth.
4.
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.
5.
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.