Which of the following statements is true about growth stocks?
A) These are stocks of firms that grow their sales at above-average rates and are expected to do so for a length of time.
B) These are stocks of firms that grow their earnings at above-average rates and are expected to do so for a length of time.
C) They generally pay dividends during their fast growth phase.
D) None of the above.

Question

Quizplus · Accepted Answer

Growth stocks are stocks of firms that grow their earnings at above-average rates and are expected to continue doing so for a length of time. They are typically reinvesting their earnings into the company in order to continue driving growth, rather than paying dividends to shareholders. It is less about sales growth and more about earnings growth.

Which of the Following Statements Is True About Growth Stocks