Canadian Securities Course (CSC) Level 2 Practice Exam

Question: 1 / 400

What best describes the risk profile of target date funds in relation to age, asset mix evolution, and transition to fixed income investments?

Risk increases with age, fixed asset mix, transition to equities over time

Risk tolerance declines with age, fixed asset mix, transition to fixed income over time

The correct answer is B. As investors in target date funds get older, their risk tolerance typically decreases. Target date funds are designed to adjust the asset mix over time to become more conservative as the target date (usually retirement) approaches. This means that there is a transition from a higher allocation to equities towards fixed income investments as investors age. This shift in asset mix is aligned with the general principle of reducing risk exposure as investors approach retirement age.

Get further explanation with Examzify DeepDiveBeta

Constant risk level, dynamic asset mix, no transition to fixed income

Default risk, exchangeable asset mix, no transition strategy

Next Question

Report this question

Download Canadian Securities Course (CSC) Level 2 Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy