When stocks outperform bonds, rebalancing a portfolio with a constant mix strategy containing stocks and bonds requires
A) buying stocks and selling bonds
B) buying bonds and selling stocks
C) buying stocks and bonds
D) selling stocks and bonds

Question

Quizplus · Accepted Answer

When stocks outperform bonds, their proportion in the portfolio increases. To maintain the original allocation, you need to sell some stocks and buy bonds.

When Stocks Outperform Bonds, Rebalancing a Portfolio with a Constant