The Constant-Ratio Plan

question 54

Multiple Choice

The constant-ratio plan

• A) requires the establishment of trigger points for portfolio rebalancing.
• B) utilizes a predetermined ratio between desired current yield and expected capital gains.
• C) strictly adheres to a buy-and-hold strategy.
• D) is an attempt to time the cyclical movements of the market.

---

Definitions:

Sedimentary

relating to rock that has formed from sediment deposited by water, wind, or ice.

Igneous

Refers to rocks or minerals that solidified from molten or partly molten material, indicative of volcanic processes.

Sediment

Grains and other fragments that originate from the weathering and transport of rocks, and the unconsolidated deposits that result from the deposition of this material.

Transported

Refers to materials that have been moved from their original location to a new place by natural processes such as erosion or glaciation.