Funds Intermediate: Conservative Mutual Funds

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1.

A mutual fund is conservative as long as its goal is to conserve principal.

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True

False

True. That is the defining characteristic of conservative funds.

2.

A secured bond is one that is backed by collateral.

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True

False

True. To be secured is to be backed by collateral.

3.

Conservative mutual funds invest in securities with _______.

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High volatility

Low volatility

High default risk

Low volatility. Low volatility is part of what makes a conservative fund conservative.

4.

Large portions of a conservative mutual funds investments are likely to be in growth stocks.

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True

False

False. Large portions of a conservative funds investments are likely to be in bonds.

5.

Conservative mutual funds are generally suited for investors with a long time horizon.

Choose wisely. There is only one correct answer.

True

False

False. Conservative mutual funds are generally suited for investors with a short time horizon.

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