Funds Intermediate: Asset Allocation Mutual Funds

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1.
Mutual funds are a poor choice with which to attempt asset allocation.
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False. One of the best ways to diversify a given sum of money is to invest it into one or more mutual funds.
2.
The primary advantage of the single-fund approach to asset allocation is ________.
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Cost. There are only a few costs involved.
3.
Active allocation adopts a buy-and-hold strategy.
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False. Passive, not active, allocation is a strategy in which the investor does little to alter his or her mix of investments, adopting a buy-and-hold philosophy.
4.
A growth or aggressive-growth mutual fund typically invests almost entirely for _______.
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Capital appreciation. The growth or aggressive-growth fund typically invests almost entirely for capital appreciation despite that the road to long-term growth is paved with short-term risks and possible losses in principal.
5.
Investors using the multifund approach to asset allocation are interested in _______.
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Taking advantage of particular fund managers or families. Investors are interested in taking advantage of the management expertise of particular fund managers to duplicate specific historical performances.