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A fund manager holds a portfolio that has a strategic asset allocation target of 60% in equities and 40% in bonds. She is applying a

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A fund manager holds a portfolio that has a strategic asset allocation target of 60% in equities and 40% in bonds. She is applying a percentage of portfolio approach to rebalancing, and she wants to know whether each of the following determinants should increase or decrease the size of the corridor she places around the equities asset class. 1. The equities asset class is expected to become more volatile. 2. Transaction costs are expected to decrease for equities. 3. The equities asset class becomes more highly correlated with the bonds asset class. Select one: a. 1) Decrease 2) Decrease 3) Increase O b. 1) Decrease 2) Increase 3) Increase O c. 1) Increase 2) Decrease 3) Decrease O d. 1) Decrease 2) Increase 3) Decrease O e. 1) Decrease 2) Decrease 3) Decrease

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