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Funds Intermediate: Balanced Mutual Funds

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1.
Mutual funds with high asset turnover have higher transaction costs than funds with low turnover.
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True. Transaction costs can lower the return on a fund. This happens because transaction costs are deducted from the assets in a fund.
2.
Balanced mutual funds are less conservative than pure stock funds.
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False. Balanced funds are more conservative than pure stock funds. They contain a lot of bonds.
3.
The "balance" in a balanced mutual fund usually means ________.
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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 can help you evaluate the performance of a balanced mutual fund?
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All of the above. Turnover, total return, and current asset holdings can all be used to judge a balanced funds performance.
5.
Balanced mutual funds establish guidelines as to how much they can invest in each asset class.
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True. Balanced mutual funds establish guidelines as to how much of the fund can be invested in each asset.