Funds Intermediate: Balanced Mutual Funds

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1.
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.
2.
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.
3.
To evaluate a balanced mutual fund, it is best to compare its total return with _______.
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Total returns of similar balanced funds. Compare the funds total return to those of other funds with similar investment strategies.
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.
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.