Capital appreciation funds tend to invest in stocks that distribute little or no dividends so that earnings can be reinvested for expansion.

Question

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Capital appreciation funds focus on stocks that are expected to grow at an above-average rate compared to other companies or the overall market. These funds typically invest in companies that reinvest their earnings into expansion, research and development, or other areas that could lead to future growth, rather than distributing these earnings as dividends.

Capital Appreciation Funds Tend to Invest in Stocks That Distribute