Funds Intermediate: Balanced Mutual Funds

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1.
A portfolio is diversified if it focuses primarily on one asset class.
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False. A portfolio is diversified if it contains several types of assets with different characteristics.
2.
The difference between a balanced mutual fund and an asset allocation mutual fund is ________.
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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.
One of the goals of a balanced mutual fund is to ________.
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Conserve principal. Balanced funds are fairly conservative. They do not have rapid growth or tax savings as goals.
4.
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.
5.
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.