What does the term "pro rata" refer to in the context of allocation methods?

The term "pro rata" refers to an allocation method where resources or costs are distributed proportionally according to a specific criterion, such as the amount invested by each client. In the context of investment allocations, this means that if a firm has a limited number of shares or funds to distribute, they will allocate them to clients based on the proportion of their individual investments relative to the total investments.

For example, if a client has invested 10% of the total available funds, they would receive 10% of the allocation of shares or resources available. This ensures that each client receives a fair portion that reflects their level of investment.

This method contrasts with equal sharing, random selection, or strictly regulated random distribution, which do not take into account clients' individual contributions to the investment pool. Hence, the choice highlighting allocation based on the percentage of investment from each client accurately captures the essence of "pro rata."