Stocks Beginner: Growth Stocks

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1.
An investor with a long investment horizon may decide to invest in growth stocks.
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True. Younger investors may purchase growth stocks, expecting to hold them for a long period and take advantage of their ability to provide above-average returns over time.
2.
You are most likely to find growth stock issued by companies in fields that have achieved stable or flat growth.
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False. You are most likely to find growth stock issued by companies in high-growth industries.
3.
You can defer taxes on your returns from growth stock for a long period.
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True. You can defer most of your taxable income until you sell the stock.
4.
Growth stock is issued by companies that ______.
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Demonstrate earnings growth potential. Growth stock is issued by companies that have reported higher-than-average earnings growth and expect to continue to demonstrate high profit growth.
5.
A stock with a price/earnings ratio of 47 is likely a growth stock.
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True. A stock with a P/E ratio of more than 20 is likely to be a growth stock.