Funds Intermediate: Balanced Mutual Funds

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1.
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.
2.
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.
3.
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.
4.
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.
5.
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.