The purpose of portfolio rebalancing is primarily to: Option: Time the market to capitalize on price fluctuations, Maintain a desired asset allocation over time, Eliminate all investment risk from a portfolio, Maximize short-term investment returns

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The purpose of portfolio rebalancing is primarily to:

Time the market to capitalize on price fluctuations

Maintain a desired asset allocation over time

Eliminate all investment risk from a portfolio

Maximize short-term investment returns

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What is the primary reason for rebalancing an investment portfolio periodically?

"To maintain the desired asset allocation and manage risk."

"To time the market and predict future market movements."

"To maximize tax savings on investment gains."

"To chase higher returns by frequently switching investments."

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What is the process called when fund managers adjust the portfolio in response to market fluctuations?

Risk management

Asset allocation

Portfolio optimization

Rebalancing

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How do automated investment platforms typically manage portfolio rebalancing?

Proactive adjustments aligned with target asset allocation

Manual rebalancing requiring explicit investor consent

Static portfolios without active rebalancing mechanisms

Rebalancing discretionary to the platform's internal guidelines

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What is the central aim of asset allocation within a portfolio?

Return maximization

Complete elimination of risk

Equilibrium between risk and return potential

Risk minimization

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What is a key consideration when creating a momentum portfolio?

The portfolio should be rebalanced regularly

The portfolio should only include large-cap stocks

The portfolio should be held for at least one year

The portfolio should only include stocks with positive returns