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

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 actual ratio deviates from the target, thus necessitating trigger points for rebalancing.

The Constant-Ratio Plan