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Level III
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Asset Allocation
Asset Allocation
Easy
Sterling Endowment has a target equity allocation of 55% with a rebalancing corridor of ±5%. After a strong equity rally, the equity weight has risen to 59%. Under percentage-of-portfolio rebalancing, what action should the endowment take?
A
No action — the equity weight is within the 50%–60% corridor
B
Sell equities to bring the weight back to exactly 55%
C
Sell equities to bring the weight to 60% (the upper corridor boundary)
D
Increase the corridor to ±7% to avoid unnecessary trading
Select an answer to continue
Tags
#rebalancing
#threshold-rebalancing
#corridor
#portfolio-management
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