Diversification and Mutual Funds

Front

What is the purpose of diversification in investments?

Back

To reduce volatility

Front

What does the term "Volatility" refer to in the context of a market or investment?

Back

The likelihood that a market or investment will change in value.

Front

Can volatility be considered good for investors?

Back

Yes, it can be good or bad.

Front

What is "Capitalization" in the context of a company's financial value?

Back

A measure of a company's financial value.

Front

What is the nature of mutual funds that makes them a tool for diversification?

Back

They are already diversified by nature.

Front

Why might it be cheaper to invest in mutual funds compared to buying stocks individually? Options: Mutual funds offer higher returns, Mutual funds are less risky, Mutual funds allow you to pool money with other investors, Mutual funds are only available to professional investors

Back

Mutual funds allow you to pool money with other investors

Front

What type of companies do growth stock mutual funds typically invest in?

Back

Medium-sized companies

Front

Which category of mutual funds is characterized as being unpredictable with high risk and high return?

Back

Aggressive Growth

Front

Which mutual fund category is considered to be the most predictable in performance? Options: International, Growth & Income, Growth, Aggressive Growth

Back

Growth & Income

Front

What type of stocks do Growth and Income Stock Mutual Funds typically purchase?

Back

Stocks of large, reputable companies