Small-cap funds focus more on capital appreciation than on current income. They invest in companies with smaller market capitalizations, which are more likely to grow quickly and generate higher returns, but may not pay significant dividends.

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Small-Cap Funds

Question 23

Multiple Choice

Small-cap funds:

A) generally focus on dividend-paying stocks.
B) focus more on capital appreciation than on current income.
C) are defined as the smallest 20 percent of all funds based on total asset value.
D) are defined as the 20 percent of funds with the smallest NAVs.
E) are generally also classified as equity income funds.

Correct Answer: