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1.
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.
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.
Balanced mutual funds establish guidelines as to how much they can invest in each asset class.
True. Balanced mutual funds establish guidelines as to how much of the fund can be invested in each asset.
4.
To evaluate a balanced mutual fund, it is best to compare its total return with _______.
Total returns of similar balanced funds. Compare the funds total return to those of other funds with similar investment strategies.
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.