Funds Intermediate: Conservative Mutual Funds

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1.

A balanced mutual fund is highly diverse.

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True

False

True. To be balanced, such a fund must choose a wide variety of investments.

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 are generally suited for investors with a long time horizon.

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True

False

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

5.

A main objective of conservative mutual funds is to generate current income.

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True

False

True. The income objective is one of the defining characteristics of conservative funds.

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