Under the Variable- Ratio Plan, Additional Speculative Investments Are Made

question 51

Multiple Choice

Under the variable- ratio plan, additional speculative investments are made when the ratio

• A) of conservative investments to speculative investments increases by 10%.
• B) of the realised rate of return falls below the desired rate of return by 1% or more.
• C) of the value of the speculative investments to the total portfolio value drops below a predetermined level.
• D) of the rate of return on the speculative investments exceeds the overall market return by 1% or more.

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Definitions:

Premium/Discount

Refers to the amount by which the market price of a bond exceeds (premium) or is less than (discount) its face value.

Front-end Load

A sales charge or commission paid by an investor at the initial purchase of mutual fund shares, usually used to compensate brokers or sales agents.

NAV

Net Asset Value, the total value of a fund's assets minus its liabilities, divided by the number of shares outstanding.

Portfolio Turnover

A measure of how frequently assets within a portfolio are bought and sold by the manager over a specific period.