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.
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.
3.
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.
4.
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.
5.
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.