The composition of asset allocation funds
A) is focused completely on one type of security as specified by the particular mutual fund.
B) is fixed and not altered by the mutual fund managers.
C) A and B
D) none of the above

Question

Quizplus · Accepted Answer

Asset allocation funds are actively managed by fund managers who use a combination of different securities, such as stocks, bonds, and cash, to achieve a specific investment objective. Therefore, the composition of asset allocation funds is not fixed and can change over time depending on the market conditions and the investment strategies adopted by the fund managers. Choice A is incorrect because asset allocation funds do not focus completely on one type of security. Choice B is incorrect because the composition of asset allocation funds is not fixed and can be altered by fund managers.

The Composition of Asset Allocation Funds