Rebalancing a portfolio involves:

A Selling everything

B Buying and selling assets to return to target allocation weights

C Only adding new money

D Ignoring drift

✓ Correct Answer: Option B

Rebalancing restores portfolio weights to the strategic asset allocation targets, maintaining the desired risk profile.

💡 Why is B) the correct answer?

The correct answer to the question "Rebalancing a portfolio involves:" is Option B: Buying and selling assets to return to target allocation weights.

The other options — A) Selling everything, C) Only adding new money, D) Ignoring drift — are incorrect for this CFA Exam Prep question. As explained above: Rebalancing restores portfolio weights to the strategic asset allocation targets, maintaining the desired risk profile.

📚 About This CFA Exam Prep Practice Question

This 1-level CFA Exam Prep question from the Portfolio Management topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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Rebalancing a portfolio involves:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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