Choose wisely. There is only one correct answer to each question.
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1.
Selling some winning investments earlier than you'd like and then buying new investments has some advantages. These advantages include which of the following?
All of the above. All of these are reasons to sell off winning investments and thus rebalance your portfolio.
2.
How often should you rebalance your portfolio for best results?
Only as needed. Normally, rebalancing should occur only when your allocation is out of balance relative to your investment goals.
3.
If you have both small-company stocks and large-company stocks in your portfolio, which of them is more likely to have grown in proportion over time, assuming you haven't rebalanced during this time?
Small-company stocks. Since small-company stocks have more growth potential, they likely will have grown more, thus necessitating rebalancing if you want to maintain the volatility level of your portfolio.
4.
Why does it become necessary to periodically rebalance your portfolio?
Some investments will naturally perform better than others and increase the risk of your portfolio. For this reason, you may need to readjust its risk level.
5.
Rebalancing your portfolio is ultimately meant to keep it in synch with your investment goals.
True. As it grows out of synch with your goals over time, you need to rebalance it to keep it in line.