2010 CFAI Mock Morning session question 8A


I’ve just gone through 2010 CFAI AM Mocks, and Q8 asks whether calendar rebalancing and percentage of portfolio rebalancing would lead to different weightings in an asset class… Answer says that “weighting in UK fixed income is 45%… and that it is outside the tolerance band, so asset classes are rebalanced to target weights…” How can it be since the strategic asset allocation for UK FI is 40% and tolerance bands are + or - 10% of the target allocation (meaning 30% to 50% would be OK… right?)

Many thanks!


10% of 40%, ie 36%-44%

at ± 10% of the target allocation.

so 36-44 would be the band.

Jeez! Thanks :slight_smile: