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.
Which of the following is not one of the main asset classes in a balanced mutual fund?
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Annuities. The three main asset classes in balanced mutual funds are stocks, bonds, and cash.
3.
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.
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 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.