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Portfolio Management

A portfolio manager who believes equity securities are overvalued in the short term reduces the weight of equities in her portfolio to 35% from its longer-term target weight of 40%. This decision is best described as an example of:

a. rebalancing.

b. strategic asset allocation.

c, tactical asset allocation.

The answer is tactical asset allocation. I am confused about how to differentiate between rebalancing and tactical asset allocation. Since rebalancing is periodically adjusting back to tactical allocation….

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petarent wrote:
I am confused about how to differentiate between rebalancing and tactical asset allocation. Since rebalancing is periodically adjusting back to tactical strategic allocation….

There.  That looks better.

Simplify the complicated side; don't complify the simplicated side.

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makes more sense now. thanks!

You’re quite welcome.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/