Funds Intermediate: Asset Allocation Mutual Funds

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1.
Which of the following is true regarding the relationship between passive and active asset allocation?
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Active allocation is generally more expensive. Active allocation can be considerably more expensive because each reallocation can result in the liquidation of shares of one or more securities in exchange for shares of new securities.
2.
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.
3.
A 12b-1 fee is used to offset reduced sales charges and to cover some of the administrative costs of a mutual fund.
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True. A 12b-1 fee, which is assessed annually, is based on the fund's total net asset value, and is used to offset reduced sales charges and to cover some of the administrative costs of the fund.
4.
The three general levels of risk are conservative, moderate, and growth.
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True. The three general levels of risk are conservative, moderate, and growth (a close relative of which is aggressive-growth).
5.
The multi-fund approach is one in which the investor establishes investment positions in a number of funds _______.
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With different objectives. The multi-fund approach involves handling several investment objectives simultaneously.