rebalancing strategy question

Determine the prefered dynamic rebalancing strategy if the market is expected to be highly volatile, but more or less flat A)- Buy and hold. B) - Constant mix C)- CPPI D) A concave strategy. Don’t we have two correct answers here or am I missing something

B. Did you mean D could also be right? Hmm…I am not sure if there’s something called a concave strategy for rebalancing.

CareerChange Wrote: ------------------------------------------------------- > B. > > Did you mean D could also be right? Hmm…I am not > sure if there’s something called a concave > strategy for rebalancing. yes I meant d also could be right

B and D are correct because constant mix is a concave strategy

Constant mix has a concave figure. so like you said I would go for the B first but still D could be right. Schweser ?

I think this is why CFAI wants to eliminate the fourth option.Easier to write questions :slight_smile:

flapechino Wrote: ------------------------------------------------------- > Constant mix has a concave figure. > > so like you said I would go for the B first but > still D could be right. > > Schweser ? Yes, Schweser V.1 PE1

CareerChange Wrote: ------------------------------------------------------- > B. > > Did you mean D could also be right? Hmm…I am not > sure if there’s something called a concave > strategy for rebalancing. I remember this question. I picked B because constant mix is the real strategy. The payoff diagram is concave, but the actual strategy is constant mix. But, quoting Schweser “constant mix is a concave strategy,” so yeah, they’ve made it pretty confusing. But, no worries, CFAI would never put both those answers in a question so that you picked up that both could be correct is good.