Which of the Following Is TRUE About the Lifecycle Theory

question 102

Multiple Choice

Which of the following is TRUE about the lifecycle theory of savings?

• A) People tend to save during the early years of their lifetimes,dissave during their prime working years,and borrow during their retirement years.
• B) People tend to borrow during the early years of their lifetimes,invest during their prime working years,and save during their retirement years.
• C) People tend to borrow during the early years of their lifetimes,save during their prime working years,and dissave during their retirement years.
• D) People tend to save during the early years of their lifetimes,borrow during their prime working years,and invest during their retirement years.

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Definitions:

Compensation

involves payment or remuneration provided to an individual or entity for loss, injury, or suffering, aiming to restore financial or emotional equilibrium.

Blue Sky Laws

State laws in the United States designed to protect investors from fraud by requiring sellers of new issues of securities to register their offerings and provide financial details.

Securities

Financial instruments that represent either ownership (e.g., stocks) or a debt agreement (e.g., bonds) between the buyer and the issuer.

Preferred Shares

A class of ownership in a corporation that has a higher claim on its assets and earnings than common shares, usually with fixed dividends.