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1.
Which of the following can help you evaluate the performance of a balanced mutual fund?
All of the above. Turnover, total return, and current asset holdings can all be used to judge a balanced funds performance.
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.
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 have higher returns than equity mutual funds when the stock market rises.
False. Balanced mutual funds do not usually offer as high a return as equity funds, whether or not the market rises.
5.
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.