The fixed-weightings approach to asset allocation
A) is based on an allocation of an equal percentage of the portfolio to each separate asset category.
B) requires periodic rebalancing of the portfolio to maintain the desired weights.
C) is based on periodic adjustments to category weights in response to market changes.
D) uses stock-index futures and bond futures in a market timing strategy.

Question

Quizplus · Accepted Answer

The fixed-weightings approach to asset allocation involves maintaining a specific percentage allocation across different asset categories. This requires periodic rebalancing of the portfolio to restore the original or desired weights, as market movements can cause the actual allocation percentages to drift away from the target allocations. Choices A, C, and D describe different strategies or aspects not inherent to the fixed-weightings approach.

The Fixed-Weightings Approach to Asset Allocation