Once a Year, Rita Resets the Weights of Her Largest

question 55

Multiple Choice

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.

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Definitions:

Manufacturing Overhead

Expenses related to the manufacturing process that are not directly tied to specific products, such as salaries of supervisory staff and factory maintenance.

Direct Materials

Materials that are traceable to the production of specific goods or services and included in the cost of those goods or services.

Direct Labour

is the cost associated with workers who are directly involved in the production of goods or services, such as wages for assembly line workers.

Prime Cost

The sum of direct materials and direct labor costs that are directly attributable to the production of a product.