When Using a Constant Dollar Plan

question 58

Multiple Choice

When using a constant dollar plan,

• A) gains from the speculative portion of the portfolio are transferred to the safe portion of the portfolio.
• B) the amount of money in the speculative portion of the portfolio should decline over time.
• C) the percentage of funds in the speculative portion of the portfolio should increase over time.
• D) the ratio of safe funds to speculative funds remains constant over time.

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Definitions:

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, where the borrower agrees to pay back the principal plus interest.

Future Value

The predicted amount of money that an investment will grow to at a particular point in the future, considering a specified rate of growth or return.

Interest

The charge for borrowing money, typically expressed as an annual percentage rate.

Account

An account is a record summarizing all the transactions pertaining to a single item in the accounting equation.