Strategy Intermediate: Investing for Income

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1.
By liquidating _______ in a mutual fund, you can receive income from it.
Choose wisely. There is only one correct answer.
Shares. Bonds and taxes cannot be liquidated in mutual funds.
2.
Which of the following is most likely to determine whether a stock is income-oriented?
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A past history of dividend payments. This is more likely than any of the other choices to be true of an income-oriented stock.
3.
Companies that make big profits pay big dividends.
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False. Some of them reinvest their profits to finance future growth.
4.
Mutual funds pay dividends when their holdings pay dividends.
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True. Mutual funds are made of individual holdings. Their dividends are possible only when their holdings pay dividends.
5.
What does the income objective seek?
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Income for the present. Risk aversion is common among income investors, but their chief goal is the income.