Question

a life-cycle fund purchase assets designed to meet the needs of individuals in

Growth fund Income fund Balanced fund International fund Question 15 Which benefit of investing in mutual funds pertains to t due to a large demand for mutual fund assets? Liquidity Withdrawal option Dividend reinvestment Diversification Question 16 A life-cycle fund purchases assets designed to meet retirement only. middle-income earning years. a particular stage of life. high-income-earning years. Question 17 Which statement regard REITs is false?

Answer 1

Answer is the third option - a particular stage of life, Ill explain why that is the answer and why other options are not the answer.

* retirement only - A life cycle fund can be used for planning retirement and is generally used for retirement purposes but it can be used whenever the investor require capital at a particular stage of life.

* middle income earning years - It is not specifically used as an investment option in the middle income earning years, it is generally used by someone in his/her younger age when they are in the lower income earning years they start planning for their retirement, a life cycle fund would start from a high risk portfolio and the slowly transition to lower risk portfolio. Thus it can be used by someone in their middle income earning years as well but is not specifically used by them.

* A particular stage in life- this is the best possible answer according to me among the above stated options as it can be used by anyone who is in any particular stage of his life and want a particular sum of money in a particular time of his life in the future. A person in his middle income earning stage can also invest in this and a person in low income earning stage can also invest in this, the fund will be designed according to that person and the time at which the capital will be required. The life cycle fund of a person in their low income earning stage will invest more in high risk securities which will provide higher return whereas the life cycle fund of a person at the medium income earning stage of life will invest less in high risk securities as compared to someone in his low income earning stage.

*high income earning stage- As stated above, the life cycle fund can be used at any income earning stage of life and not only by an individual on the high income earning stage.