Chapter 12/L4

What is the practice of dividing the money a person invests among different types of investments in order to lower risk called?

• Capitalization

• Dividend

• Diversification

• Amortization

What term refers to the total dollar market value of a company or how much a company is worth?

• Diversification

• Dividend

• Capitalization

• Depreciation

What is a distribution from the net profits of a company to its shareholders called?

• Capitalization

• Dividend

• Diversification

• Interest

What is the primary purpose of diversification in an investing plan?

• To increase the risk of investments

• To spread money across different types of investments

• To focus on a single type of investment

• To avoid investing in mutual funds

Which of the following is NOT a reason to diversify your investments?

• Reduce risk

• Maximize returns

• Protect against market volatility

• Increase investment costs

What is a characteristic of growth stock mutual funds (mid-cap)?

• Made up of large, well-established companies

• Provide maximum long-term growth from stocks of primarily smaller companies

• Medium-sized companies that have experienced some growth and are still expanding

• High risk with high potential return

Which type of mutual fund is considered the "wild child" of your portfolio?

• Growth stock mutual funds (mid-cap)

• Growth and income stock mutual funds (large-cap)

• Aggressive growth stock mutual funds (small-cap)

• Bond mutual funds

What is the value range for mid-cap companies?

• Under $2 billion

• $2-10 billion

• More than $10 billion

• $5-15 billion

Which type of mutual fund is made up of large, well-established companies?

• Growth stock mutual funds (mid-cap)

• Bond Mutual Funds

• Aggressive growth stock mutual funds (small-cap)

• Growth and income stock mutual funds (large-cap)

What is an international stock mutual fund?

• A fund that invests only in U.S. companies.

• A fund that invests in companies from around the world.

• A fund that invests only in European companies.

• A fund that invests only in technology companies.