Ch.12 · Model Portfolios and Asset Allocation · hard
What does 'required rate of return' mean in the context of goal-based financial planning?
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EXPLANATION
Required rate of return is the return that the investor's portfolio must achieve to accumulate the target corpus by the goal deadline, given the starting balance, regular investment amount, and time available. It guides asset allocation — if the required rate is high, more equity exposure may be needed.
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