Funds Intermediate: Asset Allocation Mutual Funds

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Which of the following is not one of the basic instruments of asset allocation?
Choose wisely. There is only one correct answer.
Annuities. Through a combination of cash, bonds, and common stocks, mutual funds afford an investor diversification and professional management.
2.
Which of the following is not considered when deciding whether or not to reallocate assets using active allocation?
Choose wisely. There is only one correct answer.
The Dow Jones Industrial Average. While the Dow can influence investor decisions, its daily performance is too universal to have any meaningful effect on an individual portfolio. Instead, investors should look to such benchmarks as the price, volatility, and performance of their portfolios, as well as interest rates and changes in management of their funds.
3.
Investors using the multifund approach to asset allocation are interested in _______.
Choose wisely. There is only one correct answer.
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.
4.
A growth or aggressive-growth mutual fund typically invests almost entirely for _______.
Choose wisely. There is only one correct answer.
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.
The primary advantage of the single-fund approach to asset allocation is ________.
Choose wisely. There is only one correct answer.
Cost. There are only a few costs involved.