Funds Intermediate: Conservative Mutual Funds

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1.

If you are trying to conserve principal, a conservative mutual fund may help you reach your goals.

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True

False

True. Conservative mutual funds are made for just that purpose.

2.

Conservative mutual funds actively trade their investments.

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True

False

False. Conservative mutual funds rarely trade their investments.

3.

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.

4.

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.

5.

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.

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