Question

violet is 45 years old and is switching jobs. she has worked for bb industries for the last 10 years. bb industries offered a defined contribution pension plan (dcpp). her plan is vested and the plan administrator informs her that the value of her pension plan is $213,000. violet’s financial advisor suggests that she transfer the funds in her pension plan to a locked - in retirement account (lira). violet plans to retire at age 65.
what types of investments should violet’s advisor recommend for her lira?
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a. investments with a short - term horizon
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b. investments with a very - short - term horizon

c. investments with a medium - term horizon

d. investments with a long - term horizon

Explanation:

Violet is 45 and plans to retire at 65, so her time until retirement is 20 years, a long - term horizon. Retirement accounts with long - term horizons (like LIRA here) are typically advised to have investments with a long - term horizon to grow the funds over time, accounting for market fluctuations and compound growth. Short - term horizons are for near - term goals, but Violet has 20 years until retirement, so long - term investments make sense.

Answer:

d. Investments with a long - term horizon