The Fixed-Weightings Approach to Asset Allocation

question 111

Multiple Choice

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.

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Definitions:

Investment

The allocation of resources, such as capital, with the expectation of generating an income or profit.

Annual Returns

The percentage gain or loss on an investment over a one-year period.

Stock

Equity investment that represents ownership in a company and entitles the holder to a proportion of its profits.

Percentage Return

The increase or decrease in an investment, represented as a fraction of its initial cost and expressed as a percentage.