Funds Intermediate: Growth Mutual Funds

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1.
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.
2.
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.
3.
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.
4.
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.
5.
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.