Basic Division Officer Course (BDOC) Week 1 Practice Test

Lifecycle fund is described as?

A fixed-risk fund A blend of the individual funds that automatically adjusts the risk dependent on your target retirement date A cash-like fund A heavily leveraged fund

Correct Answer:

A blend of the individual funds that automatically adjusts the risk dependent on your target retirement date

Explanation:

Lifecycle funds are target-date funds that blend stocks, bonds, and other assets and automatically adjust the mix as you approach your retirement date. The idea is to take more risk early on to grow the account, then gradually reduce risk by shifting toward bonds and cash as the retirement date nears. This automatic risk adjustment through a glide path is what defines a lifecycle fund. It isn’t a fixed-risk fund, a cash-like fund, or a heavily leveraged fund—the allocations change over time based on your target retirement date.

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