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1.
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.
2.
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.
3.
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.
4.
A portfolio is diversified if it focuses primarily on one asset class.
False. A portfolio is diversified if it contains several types of assets with different characteristics.
5.
Balanced mutual funds are less conservative than pure stock funds.
False. Balanced funds are more conservative than pure stock funds. They contain a lot of bonds.