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1.
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.
2.
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.
3.
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.
4.
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.
5.
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.