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Strategy Intermediate: Investing for Income

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1.
Companies that make big profits pay big dividends.
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False. Some of them reinvest their profits to finance future growth.
2.
What does the income objective seek?
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Income for the present. Risk aversion is common among income investors, but their chief goal is the income.
3.
Mutual funds pay dividends when their holdings pay dividends.
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True. Mutual funds are made of individual holdings. Their dividends are possible only when their holdings pay dividends.
4.
By liquidating _______ in a mutual fund, you can receive income from it.
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Shares. Bonds and taxes cannot be liquidated in mutual funds.
5.
The stocks of dividend-paying companies are popular among investors who want _______.
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Income. Neither low taxes nor capital appreciation are typical features of income stocks.