What is an asset allocation fund and how does it differ from other types of mutual funds?
Answer to relevant QuestionsIf growth, income, and capital preservation are the primary objectives of mutual funds, why do we bother to categorize funds by type? Do you think such classifications are helpful in the fund selection process? Explain. Refer to Problem 12.9 above. If there were a 3% load on this fund, assuming you pur chased the same number of shares, what would your rate of return be? What role, if any, do an investor's personal characteristics play in determining portfolio policy? Explain. Briefly describe each of the following return measures for assessing portfolio performance and explain how they are used. a. Sharpe's measure b. Treynor's measure c. Jensen's measure (Jensen's alpha) What is asset allocation? How does it differ from diversification? What role does asset allocation play in constructing an investment portfolio?
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