rebalancing ratio

rebalancing ratio =

A. old DD/new DD

B. old DD/new DD -1

Confused by the official answer of 2011 exam.

(Old DD / new DD - 1 ) X MV of portfolio = cash required to rebalance

Old DD / new DD = Rebalancing Ratio

^ Yes.

what would be the answer to cash required if RR is less than 1. would you write sell bonds?


One with the highest duration = controlling position–will reduce the cash required to rebalance…