n NISM Certifications
X NISM Series X
Medium

Portfolio rebalancing should be undertaken whenever the asset allocation deviates significantly from the target mix due to market movements or price corrections, including all the scenarios listed.

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Portfolio rebalancing should be done when price of one asset class has corrected significantly so that more sum can be allocated to buy at low prices

  2. B

    Portfolio rebalancing should be done when the decided asset allocation ratio has gone awry and it needs to be rebalanced

  3. C

    Portfolio rebalancing should be done when price of one asset class has gone up significantly and one should book partial profit to restore the balance

  4. All of the above

    Correct answer

Why this is the answer

Rebalancing is necessary in various situations such as significant price corrections, deviations from target allocation, or profit booking to maintain optimal portfolio risk and return.

Test yourself for real

Take a full NISM Series X mock test.

Same duration, same weighting, same difficulty distribution as the real exam — with explanations on every question.

NISM Series XB- Investment Adviser (Leve…