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.

Question

Quizplus · Accepted Answer

The life-cycle theory of asset allocation suggests that as investors age, they should gradually shift their asset allocation to become more conservative, reducing risk as they approach retirement.

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