Multiple choice

A flexible ratio of asset allocation means

  1. continuously changing the ratio of various assets in the portfolio

  2. not doing any re-balancing and letting the profits run

  3. active switching

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A flexible asset allocation ratio allows the portfolio to drift based on market performance without mandatory rebalancing, letting profits run in winning asset classes. This contrasts with fixed-ratio approaches that require periodic rebalancing to maintain target allocations. Option A describes active management, while option C refers to frequent trading between assets.

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