Funds Intermediate: Growth Mutual Funds

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Stocks that sell below their worth are called _______ stocks.
Choose wisely. There is only one correct answer.
Value. Stocks that managers believe are selling for less than they are worth are called value stocks.
2.
How do the managers of growth mutual funds enable their funds to grow in value?
Choose wisely. There is only one correct answer.
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.
The performance of a growth mutual fund depends upon the _______ of the securities it contains.
Choose wisely. There is only one correct answer.
Performance. A fund is only as good as the investments it contains.
4.
Growth mutual funds pay few or no dividends because the companies they invest in usually reinvest their profits for more growth.
Choose wisely. There is only one correct answer.
True. Reinvesting profits adds to a companys capitalization.
5.
Which of the following is a strategy that the manager of an aggressive-growth mutual fund may use to increase the funds value?
Choose wisely. There is only one correct answer.
Frequent buying and selling. This strategy helps the manager avoid the risk that a stock will plunge in value.