Funds Intermediate: Growth Mutual Funds

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1.
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.
2.
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.
3.
Growth mutual funds rarely make the list of top ten funds from one year to the next because _______.
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They are very volatile. They may not perform as well as "top ten" funds every year, but over the course of many years, they show steady growth.
4.
Which of the following terms is not likely to be found in the name of a growth mutual fund?
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"Income." Growth funds do not pay enough income to warrant the use of a word like "income" in their names.
5.
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.