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A directory is a unique file that again holds data. Only here, the
data is restricted to being a list of files (the contents of the
directory). This list of files (directory) can be any type of file
--- ordinary, directory, special, or a link. All directory files are
maintained by the operating system, via some file related command or
system call. Directories are usually created with mkdir and
removed with rmdir.
A very special directory is called your home directory. This is the directory where you are put when you first log in. This directory is the location where all of the programs will search for thier initialization files.
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