Funds Intermediate: Balanced Mutual Funds

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1.
An asset allocation mutual fund can be more volatile than a balanced fund.
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True. Asset allocation funds can be more volatile than balanced funds, depending upon their asset mix and investment objectives.
2.
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.
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.
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.
5.
Balanced mutual funds have higher returns than equity mutual funds when the stock market rises.
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False. Balanced mutual funds do not usually offer as high a return as equity funds, whether or not the market rises.