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Options
- A
The PMS should regularly sell the dynamic proportion and buy the stable proportion.
- B
The PMS should alter the Beta of the risky component of the portfolio.
-
The PMS should do nothing as it's a Buy and Hold strategy.
Correct answer
- D
The PMS should book the profit in the dynamic component and utilize it for other purposes.
Why this is the answer
In a buy-and-hold strategy, the portfolio manager sets a strategic asset allocation and does not make changes unless necessary. There’s no rebalancing unless the initial investment thesis is violated.
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