Understanding Market Capitalization and Company Sizes
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Questions and Answers

What is the main difference between growth businesses and value businesses?

  • Growth businesses pay out most of their profits as dividends, while value businesses reinvest most of their profits for future growth.
  • Growth businesses are typically smaller in market capitalization compared to value businesses.
  • Growth businesses reinvest most of their profits for future growth, while value businesses pay out most of their profits to investors as dividends. (correct)
  • Growth businesses have fewer opportunities for expansion, while value businesses have numerous growth opportunities.

    • What is the primary way investors in growth businesses expect to benefit?

  • By seeing the share price grow (correct)
  • By investing in well-established companies
  • By receiving high dividend payments
  • By experiencing stable income

    • Which of the following statements is true about Amazon based on the text?

  • Amazon has a small market capitalization compared to other companies.
  • Amazon is a value company known for its stable dividends.
  • Amazon reinvests its profits heavily for future growth opportunities. (correct)
  • Amazon focuses solely on advertising revenue for its growth.

    • Why do investors in value businesses typically hope to enjoy a good level of stable income?

    <p>Because value companies pay out most of their profits as dividends.</p> Signup and view all the answers

    Which company mentioned in the text is an example of a growth business?

    <p>Netflix</p> Signup and view all the answers

    What is the primary focus of Google's revenue stream according to the text?

    <p>Advertising</p> Signup and view all the answers

    Which type of business tends to have more opportunities for further expansion?

    <p>Growth businesses</p> Signup and view all the answers

    How do growth businesses differ from value businesses in terms of profit distribution?

    <p>Value businesses distribute most of their profit as dividends while growth business reinvest most of their profits.</p> Signup and view all the answers

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