Multiple choice

Which of the following is false about fixed asset allocation?

  1. It means maintaining the same ratio between various components of the portfolio

  2. It involves rebalancing the portfolio in a disciplined manner

  3. It means that the portfolio would never be rebalanced

  4. It involves periodic review and returning to the original allocation
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Fixed asset allocation involves maintaining target ratios between portfolio components and requires periodic rebalancing to return to original allocation. The statement that 'the portfolio would never be rebalanced' is false, as rebalancing is essential to maintaining the fixed allocation strategy.

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