Funds Intermediate: Growth Mutual Funds

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1.
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.
2.
Stocks that sell below their worth are called _______ stocks.
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Value. Stocks that managers believe are selling for less than they are worth are called value stocks.
3.
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.
4.
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.
5.
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.