question archive Imagine that 5% of your portfolio is Verizon stock
Subject:AccountingPrice:3.87 Bought7
Imagine that 5% of your portfolio is Verizon stock. The stock performs well, its market capitalization increases, and now it makes up 8% of your portfolio. This scenario is an example of what type of position?
a. Single-factor scoring
b. Drifting weight
c. Multi-factor scoring
d. Fixed weight
Correct Answer is ''Drifting weight''
Since the weight in portfolio changes with the change in market capitalisation.The change in market capital lead to change in weight in portfolio.So this scenario is an example of drift weight.
Drifting weight is scenario where portfolio weighhts are changed dynamically.