Rebalancing and Cash Flows

1.A $100 million fund holds $65 million in stocks and $35 million in bonds. It receives a $10 million subscription. How much of the inflow goes to bonds to reach a 60/40 target without selling?

2.A $200 million fund holds $112 million in equities. It receives $20 million in cash. How much equity would it need to buy to reach 60% of post-flow NAV?

3.A $50 million fund holds $28 million in domestic stocks and targets 60%. After a $3 million subscription, what domestic stock shortfall remains if the full inflow buys domestic stocks?

4.A stock sleeve is 52% of NAV with a 50% target and a 47%–53% band. A subscription parked in cash brings the stock sleeve to 49%. What does the band require?

5.A portfolio targets 5% cash. It has $2 million in cash on $100 million of NAV and then receives $8 million. How much cash can it invest while retaining the target cash weight?

6.A fund expects a subscription tomorrow but has no overdraft authority. The order may still be canceled. What should govern purchases today?

7.A fund receives a subscription in euros but plans to buy dollar assets. What should it verify before placing the trades?

8.A subscription arrives while a fund already has buy orders working. How should the manager calculate additional purchases?

9.A fund holds $24 million in a sleeve with a 30% target on $100 million of NAV. An inflow of $10 million arrives. If only that sleeve is bought first, how much should it receive to hit target?

10.A portfolio is overweight liquid equities and underweight private credit. New cash arrives, but the next private credit funding window is in two months. What is a reasonable plan?

11.A $150 million portfolio has a 20% international stock target. It holds $33 million in that sleeve and gets a $15 million subscription. What is its international stock weight if it directs no inflow there?

12.A manager has two equally underweight sleeves in dollar terms. One is close to a hard minimum and the other has ample room. How should the manager direct a limited inflow?

13.A $60 million fund has $15 million in bonds. A $5 million inflow is invested in stocks. What is the new bond weight?

14.A concentrated $25 million strategy gets a $2 million subscription. To replicate current weights, it would put $320,000 into a stock whose position would then breach a hard limit. What is the right adjustment?

15.A fund sells $6 million of overweight equities and buys $6 million of underweight bonds in its routine rebalance. A confirmed $6 million inflow arrives first. What change can avoid unnecessary turnover if the revised targets permit it?

16.A model targets 30% credit and the sleeve is 27%. The fund manager can either buy one illiquid bond or buy across several liquid bonds with similar exposures. Which comparison should guide the choice?

17.A fund values a subscription at a published NAV. Its custodian has not confirmed the cash wire. What distinction matters when planning trades?

18.A multi-asset fund uses an authorized equity future to maintain market exposure while it stages cash equity buys. What should it monitor as cash trades fill?

19.A portfolio has $36 million in equities, $24 million in bonds, and no cash. A $10 million inflow is available. The new target is 55% equities, 40% bonds, and 5% cash. Which allocation reaches it?

20.A target was set when assets were $75 million. A new subscription brings assets to $90 million before investment. What basis should the manager use to calculate target dollar holdings for the intended post-flow portfolio?

21.A model recommends investing a fresh inflow immediately. The largest required buy would consume 40% of a security's usual daily volume. What adjustment is most appropriate to evaluate?

22.A fund uses a three-month cash forecast. A confirmed subscription is on Monday, and a known distribution goes out Wednesday. Why might it keep part of the inflow uninvested?

23.A fund receives an approved in-kind subscription of stocks instead of cash. What should the manager check first?

24.A portfolio is overweight technology stocks. A subscription arrives, but the new equity money would be invested in a broad index that also holds technology. What measure reveals whether the plan reduces the overweight?

25.A portfolio targets equal weights across four sectors. After a small inflow, two sectors are 3 percentage points underweight. One is far more volatile and expensive to trade today. How should the manager decide where to allocate?

26.A fund targets 10% cash and starts with $12 million cash on $100 million of NAV. After a $10 million subscription, how much can it invest to restore the cash target?

27.A manager hears a tentative $30 million subscription may arrive next month. What is the most useful action now?

28.A fund receives cash on a holiday in one asset's home market. That asset is underweight but cannot trade today. What is a sound next step?

29.A balanced fund has a 55% stock target. After a subscription it reaches 51%, still inside its 50%–60% band. The forecast shows another inflow tomorrow. What should the manager compare before trading toward 55% today?

30.A fund receives $4 million and allocates $2.5 million to securities and $1.4 million to cash. What is the remaining unallocated amount before fees?

31.A portfolio manager proposes allocating every subscription at target weights. Why might that leave existing drift unresolved?

32.A large subscription increases a strategy's NAV by 20%. Before copying old weights, what should the manager test?

33.An allocation target changes on the same day a subscription arrives. Which trading plan avoids working at cross purposes?

34.A $100 million fund has $30 million in a bond sleeve. It receives $20 million and adds $4 million to that sleeve. What is its weight after both actions?

35.A fund receives a surprise inflow during a volatile session. The order plan was sized at the prior close. What should the manager refresh before trading?

36.A $100 million fund holds $60 million of equities, $35 million of bonds, and $5 million cash. It pays a $10 million redemption entirely from cash and bond sales. What is its equity weight afterward?

37.A $150 million fund has $15 million cash and receives a $25 million redemption. It must finish with at least $5 million cash. How much in net sale proceeds must it raise?

38.A fund must pay $12 million on Friday and has $5 million of usable cash. It has $8 million in completed sales settling Monday. How much additional Friday liquidity does it need?

39.A fund faces a 10% redemption and can fund it by reducing every holding, including cash, by 10%. What does this preserve, ignoring market moves and costs?

40.A fund owns $25 million in a thin bond on $100 million of NAV. It funds a $20 million redemption entirely from other assets. What is the thin bond's resulting weight?

41.A manager needs $6 million of sale proceeds in two days. Under a stressed participation cap, a stock can contribute $2 million a day. What should the manager do if no other constraints change?

42.A fund manager can sell Treasury bills or investment-grade bonds to meet a redemption. The fund also has a known collateral call the next morning that requires bills or cash. What should the sale plan include?

43.A fund would remain within its stock weight band after using cash for a redemption, but its projected cash would fall below a hard minimum. What is the relevant action?

44.A fund has $4 million free cash, $9 million redemption due Tuesday, and $7 million confirmed subscription arriving Wednesday. No borrowing is permitted. What is Tuesday's funding gap?

45.A municipal bond portfolio expects a large redemption. Its dealer quotes attractive bids on only small lots. What should be used to estimate liquidity?

46.A portfolio must raise $10 million. Two bonds can settle in time. Bond A can provide at most $6 million at low cost. Bond B can supply the remainder at higher cost. Neither sale materially changes risk. What minimizes cost under these assumptions?

47.A fund can sell $15 million of government bonds quickly. Doing so would make the remaining portfolio materially longer in spread duration. What should the manager compare?

48.A hedge fund has a contractually permitted credit line. It considers borrowing briefly because sale proceeds arrive one day after a redemption is due. What belongs in the decision?

49.A fund initially planned $8 million of sales for a redemption. A confirmed same-day subscription provides $3 million in the required currency. Assuming both flows settle as planned, how much sale funding remains necessary?

50.A fund sells foreign stocks whose local-market proceeds settle before a dollar redemption. What additional deadline must it verify?

51.A fund sells its most liquid holdings for several consecutive redemptions. Which forward risk is most likely to rise?

52.A manager chooses among possible sales for a redemption. One lot is very cheap to trade but would breach an issuer exposure limit after payment because another holding's weight rises. What should happen?

53.A fund's $8 million cash buffer includes $3 million posted as collateral that cannot be released by the redemption date. The fund owes $7 million. What is the remaining funding requirement?

54.A fund can fund a redemption by delivering securities in kind under its terms. What must be considered when choosing the basket?

55.A $90 million fund holds $9 million cash. It pays a $15 million redemption, sells $10 million of securities, and pays $100,000 in sale costs from cash. What cash balance remains?

56.A $20 million redemption needs to be paid in three days. The fund's liquidity model shows $25 million of three-day sales in normal markets but only $14 million in its stress case. What should the contingency plan cover if there is no free cash?

57.A dealer offers an immediate block sale at a 60-basis-point discount to mid. A staged plan has expected cost of 30 basis points but meaningful settlement risk. Which comparison should decide?

58.A fund pays $10 million in redemptions on $100 million of NAV. It starts with 8% cash and wants 5% cash after payment. How much should it sell, ignoring costs?

59.A portfolio holds assets with large bid-ask spreads. Its documents specify a pre-authorized price adjustment on qualifying net outflow days. What is the economic purpose of such an adjustment?

60.A portfolio expects settlement proceeds from three brokers. One has missed its last two settlement dates. How should the funding forecast handle that sale?

61.A fund has $16 million of gross redemptions and $12 million of subscriptions today. Only $8 million of the subscriptions arrive before the payout cutoff. If there is no other cash, how much must be available from other sources by cutoff?

62.A taxable separately managed account needs cash for a client withdrawal. Two eligible sale lots have equal liquidity and risk impact but different unrealized gains. What else should guide the lot choice?

63.A portfolio manager proposes using futures to maintain equity exposure after selling shares for a redemption. What can the futures do in this plan?

64.A fund's largest investor has historically held through stress. Its redemption would still exceed the fund's normal cash buffer. What scenario belongs in liquidity planning?

65.A portfolio owes cash Friday and has a bond coupon scheduled Friday afternoon. The payout cutoff is Friday morning. How should the manager count that coupon?

66.A $5 million redemption can be funded by selling an overweight asset or an underweight asset. The overweight asset costs $20,000 more to sell. What is the most useful analysis?

67.A $100 million fund faces a $20 million redemption. Its illiquid sleeve is $16 million with an 18% hard post-payment cap. If NAV falls to $80 million, what minimum value must come out of the illiquid sleeve to meet the cap?

68.A fund faces a large redemption just as trading in one major holding is suspended. Which planning adjustment is most appropriate?

69.A fund forecast selling $10 million at 20 basis points of cost. It actually paid 45 basis points on the same amount. How much larger was the execution cost?

70.A manager briefs an investment committee after funding a heavy outflow. Which information best explains the decision?

71.A stock sleeve is at 64% against a 60% target and a hard 57%–63% band. NAV is $200 million. Ignoring costs, how much stock must be sold to get just inside the band at its upper edge, with proceeds retained in the fund?

72.A sleeve is 46% of a $100 million portfolio against a 50% target and a 47% floor. If funds are available and NAV stays fixed, what purchase restores the minimum without returning all the way to target?

73.A portfolio compares two plans that both meet hard limits. Plan A eliminates a small drift at a cost of $24,000. Plan B leaves the drift, whose quantified cost is $10,000 over the relevant horizon. What does the stated comparison favor?

74.A $40 million bond sleeve needs to be reduced by $4 million. Selling it costs 35 basis points and buying the receiving sleeve costs 15 basis points on the same $4 million. What is total estimated cost?

75.A target band has the same width in dollars for two sectors. One is highly volatile and contributes much more tracking risk per dollar of drift. What could justify a tighter band for it?

76.A manager keeps trading a sleeve back to target after tiny price moves. Most trades reverse within days, and the mandate allows a band. What change directly addresses the turnover?

77.A portfolio is inside its allocation bands, but a small energy overweight consumes most of its active risk budget. What measure matters in addition to weights?

78.A $100 million portfolio can correct a 3-point equity overweight by selling $3 million today at an estimated 40 basis points. Tomorrow's confirmed inflow would reduce the overweight, and no limit binds today. What is today's estimated sale cost?

79.A manager evaluates delaying a small trade to combine it with tomorrow's flow. Which input captures the main risk of waiting?

80.A fund sees a $2 million overweight. To fix it, a manager sells $2 million of the overweight asset and buys $2 million elsewhere. What is the two-sided traded notional before any netting?

81.A fund needs to cut interest-rate exposure after a large inflow changed its bond mix. A futures overlay is cheaper than selling cash bonds. What is the main check before choosing the overlay?

82.A manager wants to measure the cost of buying $5 million of stock. The average fill was 20 basis points above the decision benchmark, and fees were $2,000. Using $5 million as the cost basis, what was total cost?

83.A trade list buys $2 million of a broad bond fund and sells $2 million of individual bonds with nearly identical exposures. What should be established before sending both trades?

84.A portfolio buys a liquid proxy while waiting for an illiquid target to trade. What cost should be included when comparing this with waiting in cash?

85.A portfolio has $50 million in an asset on $100 million of NAV. The asset rises 10% and all other holdings are flat. What is its new weight before rebalancing?

86.A fund sells a position to rebalance. The execution spread is low, but expected market impact rises sharply above $3 million per day. It needs to sell $9 million and can wait three days without a risk breach. What schedule should it evaluate?

87.A fund estimates costs from normal-volume conditions. Rebalancing is scheduled during a holiday week with less trading activity. What should the manager change?

88.A manager ranks trades by how much they improve tracking error. One trade makes the biggest improvement but costs much more per unit of risk reduced. What criterion can produce a better affordable plan?

89.A $10 million partial rebalance cuts estimated tracking error by 20 basis points at a cost of $15,000. Trading a further $5 million cuts another 3 basis points at a cost of $12,000. What is the marginal cost per basis point for the second stage?

90.A rebalance can be done today or in three days. Under the central projection, waiting even one day would cause a hard exposure limit breach. What should guide the decision?

91.A fund follows calendar rebalancing, but a large flow creates a hard limit breach mid-month. What should the policy provide for?

92.A fund has three $2 million sales with all-in estimated costs of 10, 25, and 50 basis points. What is the expected cost of executing all three?

93.A fund's trading desk reports low implementation costs on completed rebalance orders, but many intended buys remained unfilled as prices rose. What should the review add?

94.A $100 million portfolio moves from 60% equities to 55% by selling equity and retaining the proceeds in cash. Costs are ignored. What equity notional is sold?

95.A mandate permits a temporary 3-point weight gap for up to five days. The manager plans to buy a hard-to-trade underweight over eight days, with the gap still above the ongoing limit after day five. What is missing from the plan?

96.A portfolio manager wants to know whether subscription and redemption flows improved execution last month. Which comparison isolates their role best?

97.A fund can trim an overweight today with a cheap trade. Its strategy committee will decide tomorrow whether to reduce the sleeve's target materially. What makes waiting reasonable?

98.A fund notices the cheapest rebalance trades cluster in securities that are already its most liquid holdings. What should it monitor after those sales?

99.A committee asks whether a temporary cash balance helped or hurt. What attribution separates cash drag from trading cost?

100.A manager can choose among three trades. The expected risk reductions are 6, 4, and 8 basis points, at respective costs of $3,000, $1,000, and $4,000. Which gives the most risk reduction per $1,000?

101.A portfolio plans to sell one currency's assets and buy another's. Both securities trades are within their individual cost estimates. What additional cost can change the ranking?

102.A portfolio manager wants a rule for when to rebalance after flows. Which rule best captures the tradeoff?

103.A portfolio pays $25,000 in transaction costs on a $50 million NAV. How much does that reduce NAV in basis points, holding everything else equal?

104.A fund is close to an allocation ceiling and must choose between a large trade now and a smaller trade with a follow-up. What should determine the initial order size?

105.A rebalance was expected to save money by waiting for a subscription, but the cash arrived late and the portfolio moved away from target. What should the review compare?