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Portfolio Management Quiz and Answers

Pms 25 -1

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15 views4 pages

Portfolio Management Quiz and Answers

Pms 25 -1

Uploaded by

sudeepmoitra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1). The agreement between the portfolio manager and the client dies not include details of ….

A) Tenure of Portfolio investment.


B) Custody of Securities.
C) Proportion of exposure.
D) None of the above.

2) The minimum duration of transaction period of an interval fund is …………………..


a) 4 days
b) 3 days
c) 2 days
d) 1 days

3) The underlying theme behind various attribution analysis approaches is to dissect the return into
……………
a) Return driven by benchmark.
b) Differential Return.
c) Return driven by Unsystematic risk.
d) Only 1& 2.

4) The non-discretionary portfolio manages the fund according to the direction of the investors.
a) True
b) False

5) The portfolio Manager shall take adequate steps for redressal of grivances of the investor within
………. Of the date of the receipt of the complaint.
a) 2 Month
b) 3 Month
c) 1 Month
d) 6 Month

6) On the basis of provider of the services PMS can be classified as ………..


a) PMS by asset Management Companies
b) PMS by Brokerage houses
c) Mutual fund PMS
d) Only 1& 2

7) The investor level accounts in securities are held and maintained by the depositoy.?
a) True
b) False

8) A NRI requires permission from RBI to open a demant account.


a) True
b) False

9) The minimum investment requirement under SEBI PMS regulations are not aplicable for eligible
fund manager pertaining to their activities as fund amanger to eligible investment funds.
a) True
b) False
10) In case of ………, Semi variance will be proportional to variance.
a) Vertical distributed return.
b) Partially distributed return.
c) nsystematically distributed return.
d) Systematically distributed return.

11) Which of the following are not among the forces defined by Michael Porter ?
a) Threat of substitute product.
b) Rivalry among the existing customers.
c) Threat of new entretnts
d) None of the above

12) The term securities do not include any unit linked insurance policies which provides a combined
benefit risk on the life and investment of the person.
a) True
b) False

13) Under the CAPM, the required return on a security or a portfolio is given as
a) Rf + Beta(Rm - Rf)
b) Rf - Beta(Rm - Rf)
c) Rf - Beta(Rm + Rf)
d) Rf + Beta(Rm + Rf)

14) ………………. Relative shows how one rupee has grown over a period of time.
a) Cumulative Wealth
b) Average Wealth
c) Aggregate wealth
d) Compounded Wealth

15) The specified transaction under PMLA 2002 shall includes……………..


a) Transaction in any high value imports.
b) Transaction in any high Value remittances.
c) Both 1& 2
d) None of the above.

16) Sell Side Analyst generate investment recommendation for their internal consumption.
a) True
b) False

17) The Liquidity of an investment refers to the ……………. Of the instrument.


a) Profitability
b) Time Decay
c) Marketability
d) Intrinsic value

18) GIPS standard was originally created for investment firm managing composite strategies.
a) True
b) False
19) As per RBI notification, liberalized remittances scheme, an Indian resident individual can only
invest up to …………. overseas per year.
a) $2,00,000
b) $2,50,000
c) $1,50,000
d) $1,00,000

20) In case of a low priority goal, …….. kind of investment approach is preferred.
a) Balanced
b) Conservative
c) More Aggressive
d) Either 1 or 2

21) Non discretionary Portfolio manager provides………….


a) Investment execution Services.
b) Investment management Services
c) Both 1 & 2
d) None of the above

22) The first step of portfolio Management process involves study of current financial condition and
forecast future trends.
a) True
b) False

23) In case client portfolio is redeemed in first year of investment in part or full, the exit load charges
shall be as under……
a) 3%
b) 2%
c) 2.5%
d) 1.75%

24) The document franking charges and notary charges comes under…..
a) Brokerage and transaction costs.
b) Registrar and transfer Agent
c) Out of Pocket and other incidental Expenses.
d) Depository Fee

25) ………..is the major Determinant of risk and return for a portfolio.
a) Fund management
b) Liquidity
c) Asset allocation
d) Tax Liability
A Compilation By:--
Bhardwaj Edumotive Consultancy Bengaluru
sanatbharadwaj@[Link]

1 D 6 D 11 D 16 B 21 D
2 C 7 B 12 A 17 C 22 B
3 D 8 B 13 A 18 A 23 A
4 A 9 A 14 A 19 B 24 C
5 C 10 D 15 C 20 C 25 C

Common questions

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The minimum transaction period for an interval fund is set at 2 days . This short period implies that fund managers need to carefully plan liquidity management, ensuring they maintain sufficient liquid assets to meet redemption requests during transaction windows without adversely affecting the fund's overall performance and investment strategy.

Cumulative wealth metrics, which show how one rupee has grown over time , are vital in evaluating investment performance as they provide a long-term perspective on wealth accumulation. They measure the compounded value of investments, helping investors assess the effectiveness of their strategies against goals and benchmarks and enabling comparisons across different investment periods and types.

The RBI's liberalized remittance scheme limits Indian residents to $250,000 in overseas investment per year . This cap presents challenges, particularly for investors seeking to diversify extensively or access high-value foreign assets. Constraints may necessitate prioritization of investments or alternative strategies, impacting portfolio diversity and globalization opportunities.

Non-discretionary portfolio management is significant as it allows investors to retain control over investment decisions, which aligns with preferences for direct involvement in investment choices. This approach caters to investors who may have specific investment goals or ethical concerns that they want to address personally .

Under SEBI PMS regulations, the minimum investment requirements do not apply to eligible fund managers managing investments for eligible funds . This exemption facilitates foreign fund managers in accessing the Indian market without the constraints of minimum investment norms, potentially enhancing foreign participation and investment flexibility.

Sell-side analysts generating reports only for internal use can foster information asymmetry, as insights might not reach broader market participants. While it benefits firms through competitive advantage and client-focused services, it limits market-wide transparency and efficiency, potentially affecting price discovery processes and broader investor decision-making.

Asset allocation is the primary determinant of a portfolio's risk and return . By diversifying investments across different asset classes, investors can balance potential returns with their risk tolerance. Strategic allocation decisions affect the portfolio's exposure to market volatility, return potential, and alignment with investment objectives, making it a critical element in portfolio management.

Return attribution analysis involves dissecting returns into components driven by systematic and unsystematic risks . Systematic risk affects the entire market, linked to benchmark-driven returns, while unsystematic risk relates to individual asset performance variations. Effective attribution analysis helps managers understand these effects, adjust strategies, and communicate portfolio performance transparently.

The portfolio manager's obligation to address investor grievances within one month of receipt ensures timely resolution of issues, which is crucial for maintaining investor trust and safeguarding their interests. It reflects regulatory emphasis on transparency and accountability in financial services, thus enhancing investor confidence in the system.

Liquidity, defined as marketability , is a crucial factor when assessing an investment's attractiveness. High liquidity indicates ease of entry and exit, reducing transaction costs and enabling rapid response to market changes. Conversely, low liquidity can increase costs and risks, especially in volatile markets, making it a pivotal consideration for investors prioritizing capital preservation and flexibility.

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