Canadian Securities Course (CSC) Practice Exam · Question
What is 'portfolio rebalancing'?
Portfolio rebalancing involves adjusting the weighting of different asset classes within a portfolio. This is done periodically to bring the portfolio back in l
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Question: What is 'portfolio rebalancing'?
Answer options:
- Buying and selling securities to constantly outperform the market index. ✅ Adjusting the asset allocation of a portfolio to maintain its original or target risk/return profile.
- Shifting all investments into cash during periods of high market volatility.
- Increasing the leverage within a portfolio to boost returns.
Correct answer: Adjusting the asset allocation of a portfolio to maintain its original or target risk/return profile.
Explanation: Portfolio rebalancing involves adjusting the weighting of different asset classes within a portfolio. This is done periodically to bring the portfolio back in line with the investor's intended asset allocation, ensuring it remains consistent with their risk tolerance and objectives.
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