Rebalancing corridor

reason to use a narrower corridor:
lower transaction costs, because it will not cost very much to rebalance more frequently

my question is, does it make sense? won’t a narrower corridor result in more frequent rebalancing and therefore higher transaction costs?

I believe that they mean lower costs per transaction.

thanks for the insight.

My pleasure, my friend.

If it helps, I just look at this question as “how expensive is it to rebalance this asset”

More expensive = rebalance less frequently = wider corridor

Having said that, I reserve the right to completely blow such questions on the actual exam!