Funds Intermediate: Growth Mutual Funds

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1.
The stocks that growth mutual funds invest in may not pay dividends.
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True. A corporation may reinvest its surplus earnings back into its stocks to expand the company rather than pay dividends.
2.
The performance of a growth mutual fund depends upon the _______ of the securities it contains.
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Performance. A fund is only as good as the investments it contains.
3.
Large-cap companies are popular choices for growth mutual funds.
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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.
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.
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.