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1.
Life-cycle funds eliminate _______.
The need to adjust asset allocation on your own. These funds take care of that on their own.
2.
Which is a disadvantage of life-cycle funds?
Many of the individual funds that comprise a life-cycle fund are likely to contain holdings in a number of the same companies. Therefore, the diversification you might be aiming for is not really there.
3.
Two life-cycle funds with the same target date will likely earn different returns.
True. Two life-cycle funds will likely earn different returns because they hold different portfolios inside them.
4.
The huge number of stocks held in the mutual funds held by a life-cycle funds spreads the associated expenses and thereby reduces the overall cost.
False. There are a large number of funds involved in the "fund of funds" approach. Each of those underlying funds has an expense ratio, which tends to increase the overall cost of managing them.
5.
A life-cycle fund is ___________.
A fund "basket" composed of other mutual funds. The mix of funds is designed to be suited to the retirement target date you have chosen.