An Investor Adopts a Policy of Investing in Both an Aggressive

question 6

Multiple Choice

An investor adopts a policy of investing in both an aggressive mutual fund and a short-term bond fund. When the value of the aggressive fund exceeds 65% of the portfolio value, shares of that fund are sold such that the aggressive fund represents only 45% of the portfolio. This is an example of a ________ plan.

• A) constant-dollar
• B) dollar-cost averaging
• C) constant-ratio
• D) variable-ratio

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Definitions:

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally triggers a reflexive response without prior learning.

Agoraphobia

A fear of being in situations in which help might not be available or escape might be difficult or embarrassing.

Obsession

A persistent, intrusive, and unwanted thought, urge, or image that causes significant anxiety or distress.

Compulsion

An uncontrollable urge to perform an act repeatedly, often a symptom of obsessive-compulsive disorder (OCD).