If a portfolio manager maintains constant weights of 60 percent in stocks and 40 percent in bonds for five years, the method is called a [...]
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constant-proportions strategy.
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Open it suppose that the portfolio manager maintains constant weights of 60 percent in stocks and 40 percent in bonds for all five years. This method is called a constant-proportions strategy.
Original toplevel document
Open it Now suppose that the portfolio manager maintains constant weights of 60 percent in stocks and 40 percent in bonds for all five years. This method is called a constant-proportions strategy. Because value is price multiplied by quantity, price fluctuation causes portfolio weights to change. As a result, the constant-proportions strategy requires rebalancing to restore the w
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