n NISM Certifications
X NISM Series X
Medium

The decision to rebalance a portfolio involves a trade-off between ___________.

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

Options

  1. A

    Cost of not rebalancing versus gain of rebalancing

  2. B

    Gain of not rebalancing versus cost of rebalancing

  3. C

    Gain of not rebalancing versus cost of not rebalancing

  4. Cost of rebalancing versus cost of not rebalancing

    Correct answer

Why this is the answer

The trade-off involves weighing the costs associated with rebalancing against the risks and costs of deviating from the target allocation.

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.