Funds Intermediate: Balanced Mutual Funds

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Mutual funds with high asset turnover have higher transaction costs than funds with low turnover.
Choose wisely. There is only one correct answer.
True. Transaction costs can lower the return on a fund. This happens because transaction costs are deducted from the assets in a fund.
2.
One of the goals of a balanced mutual fund is to ________.
Choose wisely. There is only one correct answer.
Conserve principal. Balanced funds are fairly conservative. They do not have rapid growth or tax savings as goals.
3.
To evaluate a balanced mutual fund, it is best to compare its total return with _______.
Choose wisely. There is only one correct answer.
Total returns of similar balanced funds. Compare the funds total return to those of other funds with similar investment strategies.
4.
A portfolio is diversified if it focuses primarily on one asset class.
Choose wisely. There is only one correct answer.
False. A portfolio is diversified if it contains several types of assets with different characteristics.
5.
The difference between a balanced mutual fund and an asset allocation mutual fund is ________.
Choose wisely. There is only one correct answer.
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.