Question
Refer to the table below:(Click on the icon located on the top-right corner of the data table below in order to copy its contents into
Refer to the table below:(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
MM Mutual |
| ||||
Time Period | Stock Price | Shares | Fund NAV | Shares | |
1 | $20.00 | 1,000 | $20.00 | 1,000 | |
2 | $25.00 | $21.00 |
Assume you are using a constant-ratio plan with a rebalance trigger of speculative-to-conservative of 1.25. What action, if any, should you take in time period 2?
(Select the best answer below.)
A.
You should take no action at this time.
B.
You should sell 140 shares of the MM fund and purchase 167 shares of the stock.
C.
You should sell 140 shares of stock and purchase 167 shares of the MM fund.
D.
You should sell 200 shares of the stock and purchase 238 shares of the MM fund.
E.
You should sell 200 shares of the MM fund and purchase 238 shares of the stock.
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