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Once you have chosen a life-cycle fund for your retirement, _______.

You are required to stay with it until retirement

You can switch to a different life-cycle fund if it meets your needs better

You can switch to a different life-cycle fund if it meets your needs better. You can roll your fund over to a different one.

Which is an advantage of life-cycle funds?

Since they are much bigger than an ordinary mutual fund, investment risk is minimized

The certainty of a specific target date automatically increases the reward / risk ratio

They eliminate the need to adjust the asset allocation within your portfolio on your own as you progress toward retirement.

They eliminate the need to adjust the asset allocation within your portfolio on your own as you progress toward retirement. They automatically become more appropriately conservative as the years go by as you approach and enter retirement.

A life-cycle fund is ___________.

A fund "basket" composed of other mutual funds

A mutual fund that owns shares in virtually all publicly traded companies

A marketing term used to describe an extremely large mutual fund

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.

Life-cycle funds eliminate risk by investing in a broad universe of diversified mutual funds.

True

False

False. Nothing can eliminate investment risk. Life-cycle funds aim to minimize it.

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.

True

False

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.