Answer:
Large-cap funds invest in
a. Companies with large market value.
Explanation:
Let Company A be a mutual fund that invests in the securities of companies that have large market capitalization. Company A is, therefore, regarded as a large-cap fund. Company A will use the size of the market capitalization to determine the companies to invest in. For example, the market capitalization of Company B is the value of the shares of the company, which is derived as the product of the number of Company B's outstanding shares and the current market price (1,000,000 x $50, market cap = $50 million). For Company A, the decision to invest in Company B is factorized based on the size of the market value, $50 million, which must be above the average market capitalization of similar companies.
