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

question 26

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

---

Definitions:

Mexican Pesos

The currency of Mexico, represented symbolically as MXN and used in financial transactions within the country.

Forward Contract

An individualized agreement allowing two parties to trade an asset at an agreed-upon price on a specified future date.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance over a specific period.

Discount Expense

The cost associated with the difference between the face value of a payable and the actual amount paid, recognized over the life of the debt.