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1.
One of the goals of a balanced mutual fund is to ________.
Conserve principal. Balanced funds are fairly conservative. They do not have rapid growth or tax savings as goals.
2.
The difference between a balanced mutual fund and an asset allocation mutual fund is ________.
No fixed asset class percentages. Unlike in balanced funds, managers of asset allocation funds can change their asset class percentages as much as they choose.
3.
The "balance" in a balanced mutual fund usually means ________.
Assets that grow are mixed with assets that generate income. With this approach, balanced funds minimize the losses of high-volatility assets.
4.
Which of the following is not one of the main asset classes in a balanced mutual fund?
Annuities. The three main asset classes in balanced mutual funds are stocks, bonds, and cash.
5.
Mutual funds with high asset turnover have higher transaction costs than funds with low turnover.
True. Transaction costs can lower the return on a fund. This happens because transaction costs are deducted from the assets in a fund.