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:

Histogram

A graphical display of data using bars of different heights to show the frequency distribution of a dataset.

Median

The middle value in a set of data when it is arranged in ascending or descending order, or the average of the two middle numbers if the set has an even number of observations.

Skewed

A distribution that is not symmetrical, indicating that the data tends to lean towards the left (negatively skewed) or right (positively skewed) of the average.

Histogram

A graphical representation of the distribution of numerical data, usually showing frequency of data intervals.