Funds Intermediate: Growth Mutual Funds

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1.
What is the objective of growth mutual funds?
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To grow over time. The objective of growth funds is to grow in value over time. Providing income is not a priority.
2.
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. Reinvesting profits adds to a companys capitalization.
3.
Growth funds seek to grow for the short term.
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False. Even though they try to earn large profits quickly, growth funds seek to grow over long periods.
4.
How do the managers of growth mutual funds enable their funds to grow in value?
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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.
5.
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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Frequent buying and selling. This strategy helps the manager avoid the risk that a stock will plunge in value.