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Funds Intermediate: Balanced Mutual Funds

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1.
To evaluate a balanced mutual fund, it is best to compare its total return with _______.
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Total returns of similar balanced funds. Compare the funds total return to those of other funds with similar investment strategies.
2.
Balanced mutual funds have higher returns than equity mutual funds when the stock market rises.
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False. Balanced mutual funds do not usually offer as high a return as equity funds, whether or not the market rises.
3.
Which of the following is not one of the main asset classes in a balanced mutual fund?
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Annuities. The three main asset classes in balanced mutual funds are stocks, bonds, and cash.
4.
Mutual funds with high asset turnover have higher transaction costs than funds with low turnover.
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True. Transaction costs can lower the return on a fund. This happens because transaction costs are deducted from the assets in a fund.
5.
The "balance" in a balanced mutual fund usually means ________.
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Assets that grow are mixed with assets that generate income. With this approach, balanced funds minimize the losses of high-volatility assets.