The constant- ratio plan
A) requires the establishment of trigger points for portfolio rebalancing.
B) utilises a predetermined ratio between desired current yield and expected capital gains.
C) is an attempt to time the cyclical movements of the market.
D) strictly adheres to a buy- and- hold strategy.

Question

Quizplus · Accepted Answer

The constant-ratio plan involves maintaining a fixed ratio of different asset classes in a portfolio, which requires rebalancing when the market value of the assets changes, thus necessitating the establishment of trigger points for rebalancing.

The Constant- Ratio Plan