Once a year, Rita resets the weights of her largest client's portfolio to 50% debt and 50% equity. Which of the following best describes Rita's actions with respect to the client's portfolio? Rita is following a:
A) buy-and-hold approach with calendar rebalancing.
B) constant mix approach with calendar rebalancing.
C) constant proportion portfolio insurance approach with corridor rebalancing.
D) buy-and-hold approach with corridor rebalancing.

Question

Quizplus · Accepted Answer

Rita's action of resetting the portfolio to a fixed 50% debt and 50% equity allocation annually is a constant mix approach with calendar rebalancing, as she adjusts the portfolio to maintain a specific asset allocation at regular intervals.

Once a Year, Rita Resets the Weights of Her Largest