The Life-Cycle Theory of Asset Allocation Proposes That as Investors

question 1

Multiple Choice

The life-cycle theory of asset allocation proposes that as investors progress through life their:

• A) asset allocation will tend to become more conservative.
• B) earnings increase in their 20s, reach a peak at about age 45, then decline.
• C) assets must grow geometrically in order to achieve reasonable goals.
• D) asset allocation should remain fixed in order to avoid short-sighted adjustments.

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Definitions:

Task Performance

The execution and completion of specific duties or work assignments by an individual or team.

Cross-Functional

Involvement or cooperation among different departments or areas of expertise within an organization to achieve a common goal.

Membership Stability

The consistency or minimal turnover in the members of a group or organization over time.

Top Executive

A high-ranking official in an organization, usually responsible for major decision-making and strategy.