An investor adopts a variable ratio policy of investing in both a high beta mutual fund and a money market fund. Money will be moved from the money market fund to the high beta fund
A) when the high beta fund's value has declined.
B) when the high beta fund's value has increased.
C) on the same date each year.
D) whenever accumulated interest in the money market fund exceeds a specified dollar amount.

Question

Quizplus · Accepted Answer

A variable ratio policy involves adjusting the investment between assets based on their performance. When the high beta fund's value declines, it's an opportunity to buy more shares at a lower price, hence the transfer of money from the money market fund to the high beta fund.

An Investor Adopts a Variable Ratio Policy of Investing in Both