Q I-

Which of the following is a step in the portfolio management process?

Study current financial and economic conditions
Develop a policy statement
Construct the portfolio
All of the above

0 Un Attempted

CORRECT ANSWER:

All of the above

Explanation:

Portfolio management process involves a set of integrated activities undertaken in a logical, orderly and consistent manner to create and maintain optimum portfolio. All of the above are steps
in this process.
Q 2.

Which of the following is the requirement for granting the certificate of registration under Portfolio Managers Regulations 2020?
The applicant has the necessary infrastructure like adequate office space; equipment and the manpower to effectively discharge the activities of a portfolio manager
The applicant is a body corporate
The applicant has appointed a compliance officer
All of the above

0 Un Attempted

CORRECTANSWER:

All of the above

Explanation:
All the above are requirements for granting the certificate of registration under Portfolio Managers Regulations.

Which of the following persons/entities can invest in PMS?

Hindu Undivided Family
Q 3.

Individuals
Non-resident Indians (as per the RBI guidelines)
All of the above 0 Un Attempted

CORRECTANSWER:

All of the above

Explanation:
All of the above can invest in PMS.

The following persons/entities can invest in PMS: • Individuals • Non-resident Indians (as per the RBI guidelines) • Hindu Undivided Family • Proprietorship firms • Association of person •
Partnership Firms • Limited liability Partnership • Trust • Body Corporate.

Typical putability (put option) feature of a bond ________ .

Gives the holder the right, under certain circumstances to sell the bond back to the issuer
Gives the bond holders the option to convert the bond into another security, typically the common stock of the firm issuing the convertible bonds Allows the issuing firms to
Q 4.

retire the bonds before the maturity by paying a prescribed price

Allows the investor to redeem the bond 0 Un Attempted

CORRECT ANSWER:

Gives the holder the right, under certain circumstances to sell the bond back to the issuer

Explanation:
A put provision gives the bondholders right to sell the bond back to the issuer at a predetermined price on specified dates. Putable bonds are beneficial for the bondholder by guaranteeing a
pre-specified selling price at the redemption dates.

Government securities carry practically no risk of _______ and, hence are called risk-free or gilt-edged instruments.
Liquidity
Tradability
Negotiability
Default
Q 5.

0 Un Attempted

CORRECTANSWER:

Default

Explanation:
G-Secs ie. Government Securities carry practically no risk of default as they are guaranteed by the Government of the country and, hence, are called risk-free gilt-edged instruments.
Q 6.

______ ratio compares the price of the stock to the earning it generates.
P/B Ratio
Price/sales ratio
Price/Cash flow ratio
P/E ratio

0 Un Attempted

CORRECTANSWER:

P/E ratio

Explanation:
The most common stock valuation measure used by analysts is the price to earnings ratio, or P/E.

For computing this ratio, the stock price is divided by the Earning Per Share (EPS) figure.
Q 7.

_______ was inserted in the Income Tax Act, 1961 to provide a ‘safe harbour’ to overseas funds availing fund management services from India based managers
Section 11 C
Section 42
Section 9 A
Section 12 D 0 Un Attempted

CORRECT ANSWER:

Section 9 A

Explanation:

In the Union Budget 2015- 16, the Finance Minister announced amendments in the Income Tax Act, 1961. These changes were aimed at developing and promoting fund management industry
in India. Section 9A was inserted in the Income Tax Act, 1961 to provide a ‘safe harbour’ to overseas funds availing fund management services from India based managers, provided the fund
and the manager comply with the requirements specified in the section.

Section 9A of the Income-tax Act, 1961 provides that in case an eligible investment fund, established or incorporated or registered outside India, collects funds from its members and invests in
India then such fund shall not be deemed to have a business connection nor will be regarded as resident in India just because fund management activity is carried out through a eligible fund
manager located in India.
Q 8.

Under relative valuation techniques, value of a stock is estimated based upon its current price relative to variables considered to be significant in valuation, such
as _________ .
Cash Flow
Book Value
Earnings
All of the above

0 Un Attempted

CORRECTANSWER:

All of the above

Explanation:
Relative valuation is conducted by identifying comparable firms and then obtaining market values of equity of these firms. These values are then converted into standardized values which are
in form of multiples, with respect to any chosen metric of the company’s financials, such as earnings, cash flow, book values or sales.

These multiples are then applied to the respective financials of the target company for valuation.
Q 9.
In India, the Central Government issues _________ .
Dated Securities
Treasury bills
Both of the above
Certificate of deposit

0 Un Attempted

CORRECTANSWER:

Both of the above

Explanation:
In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities.
Q 10.

_______ represent ownership in a company that entitles its holders to participate in its profits and the right to vote on the company’s affairs.
Equity Shares
Commercial Papers
Bonds
All of the above 0 Un Attempted

CORRECTANSWER:

Equity Shares

Explanation:
Equity Shares represent ownership in a company that entitles its holders a share in profits and the right to vote on the company’s affairs. Equity shareholders are residual owners of firm’s
profit after other contractual claims on the firm are satisfied and have the ultimate control over how the firm is operated.

Equity Shareholders are residual claim holders. Investments in equity shares reward investors in two ways: dividend and capital appreciation.
Q 11.

Which of these expense can be included under Operating Expenses?

Courier Charges
Audit fees
Fee for Portfolio manager’s services
Brokerage charges

0 Un Attempted

CORRECTANSWER:

Courier Charges

Explanation:

Operating expenses that can be charged to PMS - Charges in connection with day to day operations like courier expenses, stamp duty, document franking charges, notary charges, service
tax, other statutory levies, postal and telephone expenses, opening of bank, trading and demat accounts and any other out of pocket expenses incurred by the portfolio manager, on behalf of
the client.
Q 12.

Which of these document is mandatory for investment in PMS as per SEBI (Portfolio Managers) Regulations?
Aadhar Card
PAN Card
Savings Bank Passbook
Passport 0 Un Attempted

CORRECTANSWER:

PAN Card

Explanation:
The KYC process also requires verification of the PAN card. It is mandatory for all investors who wish to invest in PMS to complete KYC formalities.

Which of these risks are NOT related to the risk factors that are to be revealed as part of the disclosure document given to the client?
The risks arising due to the investment approach of PMS
The business risks of the group companies of the PMS
The risks arising due to Non-Diversification
Market Risks 0 Un Attempted

CORRECTANSWER:

The business risks of the group companies of the PMS

Q 13.

Explanation:
The disclosure document contains details with respect to -

1. Risk arising from the investment approach, investment objective, investment strategy and asset allocation

2. Risk arising out of non-diversification, if any

3. Statement to the effect that securities investments are subject to market risks etc

(Details of business risk of group companies is not required to be mentioned in disclosure document)
Q 14.

Mr. Karan is an investor and he has a good amount of surplus in his saving bank account. What can you make out from this statement?
It is the income of Mr. Karan
It is the future expenses of Mr. Karan
It may be the savings of Mr. Karan
It is an investment of Mr. Karan 0 Un Attempted

CORRECT ANSWER:

It may be the savings of Mr. Karan

Explanation:

Savings is basically the difference between money earned and money spent. The money in the savings account is the savings of the investor. It cannot be called an investment as investment
is the process of making the savings work to generate return - eg. Investing in a Mutual fund etc.

It is common to use the terms Savings and Investment interchangeably. However, they are not one and the same. Saving is just the difference between money earned and money spent.
Investment is the current commitment of savings with an expectation of receiving a higher amount of committed savings. Investment involves some specific time period. It is the process of
making the savings work to generate return.
Q 15.

How is the Net Worth of an individual investor calculated?

Financial assets - Financial liabilities
Tangible assets - Tangible liabilities
All Assets - All Liabilities
All Assets - Current Liabilities

0 Un Attempted

CORRECTANSWER:

All Assets - All Liabilities

Explanation:

For calculating net worth, all the assets the investor owns, i.e. the house, the car, the investments in stocks, bonds & mutual fund, balance in the saving accounts etc. are to be recorded at the
estimated market value. Then all the liabilities need to be subtracted from the assets . Liabilities may include the outstanding car loan amount, credit card loans, home etc.,. The difference
between the value of assets and the liability is Net worth.

What is the fixed amount that is paid at regular intervals till the maturity of a bond known as ?
Principal
Q 16.

Coupon
Interest
Installment

0 Un Attempted

CORRECTANSWER:

Coupon

Explanation:
Bonds create fixed financial obligations on the issuers, so they are referred as fixed income securities.

The issuer of a bond agrees to 1) pay a fixed amount of interest (known as coupon) periodically and 2) repay the fixed amount of principal (known as face value) at the date of maturity.

Who appoints the Compliance Officer in a PMS firm?

The Portfolio Manager
SEBI
Both SEBI and the Portfolio Manager in consultation 0 Un Attempted
Q 17.

CORRECTANSWER:

The Portfolio Manager

Explanation:

As per SEBI rules - Every Portfolio Manager shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications,
guidelines, instructions etc., issued by SEBI or the Central Government and for redressal of investors' grievances. The compliance officer shall immediately and independently report to SEBI
any non- compliance observed.
________ is one of the statutory cost to the investor while engaging PMS.
Registrars fees
Auditors fees
Brokerage charges
Notary charges

0 Un Attempted

CORRECTANSWER:

Notary charges

Explanation:
Statutory Charges means any charge imposed by state or federal government legislation.

Notary fees are payable to the notary public at a local court I Sub-registrar office to get a deed I documents notarised.
Q 19.
While doing the due diligence for selecting a portfolio manager, an investor should be careful and not fall in which of these traps?
If a portfolio manager is continuously beating the benchmark then this is a adequate indicator of the investment strategy
The best indicator of a portfolio managers future performance is the past performance
Both of the above
None of the above 0 Un Attempted

CORRECT ANSWER:

Both of the above

Explanation:

Past performance or beating the bench mark should not be the only criteria as selecting a portfolio manager is a complex process. It involve analysing lot more than just returns. Investors are
expected to carry out a detailed due diligence process before selecting their portfolio managers. Due diligence involves thorough quantitative and qualitative analysis of the portfolio manager’s
reputation, key personnel and operations.

Investors should understand the investment process, investment strategies, investing styles to appreciate how the investment returns are generated and gauge the likelihood of the
performance persisting in future for the given investment process.

Portfolio Managers can be evaluated on the basis of their investment philosophy, investment approach, investment process, strategies, styles and past performance compared against a
benchmark or managers’ universe.
Q 20.
Which among these is NOT a valid classification of a portfolio management service provider ?
Commodity PMS
Forex PMS
Equity PMS
Fixed income PMS

0 Un Attempted

CORRECTANSWER:

Forex PMS

Explanation:
Portfolio management services can be classified on the basis of product class such as -

1. Equity based PMS 2. Fixed Income based PMS 3. Commodity PMS 4. Mutual Fund PMS 5. Multi Asset based PMS

There is no product class such as Forex PMS.

Q 21.

Ms. Seema is a eligible fund manager and she has a disagreement with an overseas fund regarding parking of investible funds. According to the overseas fund,
they are not allowed to park their funds in scheduled Indian commercial banks. Can you guide them.
The overseas fund is allowed to park their funds in Indian scheduled commercial banks with a permission from SEBI on a case to case basis
The overseas fund is NOT allowed to park their funds in Indian scheduled commercial banks as per Chapter IIA guidelines of SEBI
The overseas fund is allowed to park their funds in Indian scheduled commercial banks: however they would be deemed to have a business connection with India, under
section 9A of Income Tax Act, 1961
The overseas fund is allowed to park their funds in Indian scheduled commercial banks if they do not want to invest in Indian markets

0 Un Attempted

CORRECTANSWER:

The overseas fund is allowed to park their funds in Indian scheduled commercial banks if they do not want to invest in Indian markets

Explanation:

As per SEBI (Portfolio Managers) Regulations - Obligation and Responsibilities of Eligible Fund Managers : An eligible fund manager shall be required to keep the funds of eligible investment
funds in scheduled commercial banks - Provided the requirement of compliance with this sub-regulation would not arise in case an eligible investment fund does not intend to invest in Indian
securities.

As per Chapter V of SEBI (Intermediaries) Regulations, 2008, the period for which a portfolio manager would be prohibited from taking any new assignment (in
case of default) is _____ .
Minimum 2 years
Q 22.

Minimum 5 years
Minimum 7.5 years
Unspecified

0 Un Attempted

CORRECTANSWER:

Unspecified

Explanation:

As per Chapter V the SEBI (Intermediaries) Regulations, 2008 - action in case of default:

• Prohibiting the portfolio manager to take up any new assignment or contract or launch a new scheme for the period specified in the order (The period of suspension will be mentioned in
the SEBI order)

On what does the Risk and Return of a portfolio depend upon? A. It depends upon the covariance of return of each pair of securities in the portfolio B. It depends
upon the proportion of investment in each constituent security
Only A
Only B
Both A and B
Neither A nor B 0 Un Attempted
Q 23.

CORRECTANSWER:

Both A and B

Explanation:
The returns from a portfolio and its risks depends on various factors. The proportion of investment in various securities and the covariance of return of each pair are two important factors.

(Covariance is a statistical measure of how one investment moves in relation to another)

What type of action can be taken by SEBI in case of default by a portfolio manager? A. It can prohibit the portfolio manager from launching a new scheme B. It can
issue a warning to the portfolio manager C. It can suspend the certificate of registration of the portfolio manager
Both A and B
Both B and C
Both A and C
All A, B and C

0 Un Attempted

CORRECTANSWER:

All A, B and C
Q 24.
Explanation:

The portfolio manager who contravenes any of the provisions of the SEBI Act, rules or regulations shall be liable including the action under Chapter V of the SEBI (Intermediaries) Regulations,
2008.

Chapter V the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 includes the following actions in case of default:

1) suspension of certificate of registration for a specified period: 2) cancellation of certificate of registration; 3) prohibiting the portfolio manager to take up any new assignment or contract or
launch a new scheme for the period specified in the order; 4) debarring a principal officer of the portfolio manager from being employed or associated with any registered intermediary or other
registered person for the period specified in the order; 5) debarring a branch or an office of the portfolio from carrying out activities for the specified period; 6) warning the portfolio manager.

A client has suffered a loss which is greater than the value of assets with a PMS. How is the client protected in such a case?
In case of a non-discretionary portfolio manager the client will be completely protected
If the agreement contains a limited liability clause then the client is protected in case of discretionary portfolio manager
Both of the above are true
None of the above is true

0 Un Attempted

CORRECTANSWER:

If the agreement contains a limited liability clause then the client is protected in case of discretionary portfolio manager
Q 25.

Explanation:

The agreement between the Portfolio manager and the client includes various clauses and one of them is -

'In case of a discretionary portfolio manager: a condition that the liability of a client shall not exceed his investment with the portfolio manager'.

(The discretionary portfolio manager individually and independently manages the funds of each investor whereas the non-discretionary portfolio manager manages the funds in accordance
with the directions of the investors)

When will the Portfolio Manager appoint a Custodian?

When it is offering fund management services to a Foreign Portfolio Investor
When it is offering advisory services to a domestic investor
When it is offering advisory services to a Foreign Portfolio Investor

0 Un Attempted

CORRECTANSWER:

When it is offering fund management services to a Foreign Portfolio Investor

Explanation:

When a Portfolio Manager is providing only advisory services, it will not appoint a Custodian. When it is providing fund management services, to domestic or foreign clients, it has to appoint a
Custodian.
Q 26.

The Asset Allocation decision explains ______ .

A significant percentage of variability of broadly diversified portfolios
A larger percentage of variation in Single fund Returns
Both of the above
None of the above

0 Un Attempted

CORRECTANSWER:

Both of the above

Explanation:
As per the findings by Ibbotson, Roger G., and Paul D. Kaplan (2000), suggesting that a portfolio’s investment policy is an important contributor to return variability.

Across all portfolios, asset allocation decision explains an average of 40 percent of the variation in fund returns. For a single fund, asset allocation explain 90 percent of the fund’s variation in
returns overtime.

Which type of equity can be offered to investors in the Accumulation Phase?

Zero Beta Equity
Low Beta Equity
High Beta Equity
Equity with Beta = 1
Q 27.

0 Un Attempted

CORRECTANSWER:

High Beta Equity

Explanation:

Accumulation Phase: In this phase, the individual has a very long time horizon and a potentially growing income stream, so he can undertake more high-return, high-risk capital gain- oriented
investments. Therefore the investor can invest in high beta equity.

Beta relates the return of a stock or a portfolio to the return on market index. It reflects the sensitivity of the fund’s return to fluctuations in the market index. A beta that is greater than one
means that the portfolio or stock is more volatile than the benchmark index, while a beta of less than one means that the security is less volatile than the index.

What type of strategy is a company following if it is positioning it self as an unique one in the industry?
Black swan
Differentiation
Blue ocean
Cost leadership

0 Un Attempted
Q 28.

CORRECTANSWER:

Differentiation

Explanation:
Michael Porter suggests two major competitive strategies of companies : Cost Leadership and Differentiation.

Cost Leadership: Under this strategy the firm seeks to be the low-cost producer, and hence the cost leader in its industry. Cost advantages vary from industry to industry.

Differentiation Strategy: Under this strategy, the firm positions itself as unique in the industry. Again the possibilities of differentiation differ from industry to industry.

The Black Swan Theory refers to those events which are difficult to predict in the normal course of business. They are random, unexpected, but high-impact events.
These events are considered outliers, because there is no past data which can point towards its occurrence in the foreseeable future.

The Blue Ocean Strategy is a business theory that suggests companies should create uncontested market space, making the competition
irrelevant
Q 29.

_______ is not like a traditional bond.

Zero coupon bond
Convertible bond
Corporate bond
Government bond

0 Un Attempted

CORRECT ANSWER:

Convertible bond

Explanation:

A convertible bond is not like a normal interest paying/adjusting bond.

A convertible bond is a combination of a plain vanilla bond plus an embedded equity call option. It gives the bondholder the right to exchange the bond for a specified number of common
shares of the issuing company.

Which valuation metric is appropriate to value a firm belonging to a industry which thrives on high volume and low margin model?
Price Earnings Ratio
Price / Book Value Ratio
Q 30.

Price / Sales Ratio

Price / Current Assets Ratio

0 Un Attempted

CORRECTANSWER:

Price / Sales Ratio

Explanation:
The Price-to-sales (P/S) ratio is calculated by taking a company's market capitalization and divide it by the company's total sales.

In case of companies not earning profits yet, or companies in high volume - low margin businesses instead of earning based ratios, investors can look at the P/S ratio to determine whether the
stock is undervalued or overvalued.

In a discretionary PMS, a client cannot impose which of the following condition I restriction?
The type of securities in which investment can be made
Market timing for buying/selling the securities
The investment approach
The industry sector in which investments cannot be made
Q 31.

0 Un Attempted

CORRECT ANSWER:

Market timing for buying/selling the securities

Explanation:
Discretionary portfolio manager individually and independently manages the funds of each investor as per the contract. This could be based on an existing investment approach or strategy
which the portfolio manager is offering or can be customized based on client’s requirement.

The clients requirement can include the type of investment approach, sectors/ industries in which not to invest etc. but the client cannot specify the market timing to buy/sell.

Identify the true statement(s) -

Performance Attribution Analysis is the correct way to decide the amount of performance fee that can be charged by a portfolio manager
Performance Attribution Analysis identifies whether a portfolio has outperformed the benchmark or it has not outperformed the benchmark in terms of risk-return metrics
Both of the above
None of the above

0 Un Attempted
Q 32.

CORRECT ANSWER:

Performance Attribution Analysis identifies whether a portfolio has outperformed the benchmark or it has not outperformed the benchmark in terms of risk-return metrics

Explanation:
The underlying theme behind various attribution analysis approaches is to dissect the return into majorly two components: Return driven by the benchmark and the Differential return. And then
identifying and quantifying the sources of differential return to primarily establish whether it was driven by skill of the portfolio manager or some random factors

An investor has deposited Rs 50 lakhs with a fund manager. Out of this, only Rs. 35 lakhs was invested and this earned Rs. 3,40,000. How much return did the
investor effectively earn?
9.71%
8.33%
6.8%
5.7% 0 Un Attempted

CORRECTANSWER:

6.8%
Q 33.

Explanation:
The investor has deposited Rs 50 lakhs. So the effective return has to be calculated on the total amount deposited

Return on Investment = Net Return on Investment / Cost of Investment ?*100%?

= 3,40,000 I 50,00,000 X 100% = 6.8%

Identify the INCORRECT statement with respect to Currency Risk.

Currency risk can increase the realized return on a foreign investment
Currency risk can decrease the realized returns on a foreign investment
Currency risk is covered by the returns generated on foreign investments
Currency risk arises due to unpredictability in exchange rate

0 Un Attempted

CORRECTANSWER:
Currency risk is covered by the returns generated on foreign investments
Q 34.

Explanation:

The fluctuations in currency values can either enhance or reduce the returns associated with foreign investments. This is called currency risk. This risk arises due to the unpredictability in
exchange rates.

Returns on foreign investments can never be covered by currency risk.

_____ is not considered a part of Rebalancing cost.

Stamp duty levied
Brokerage cost
Securities Transaction Tax (STT)
PMS fees payable

0 Un Attempted

CORRECTANSWER:

PMS fees payable

Explanation:
There are two types of cost in rebalancing - transaction cost and tax cost. Transaction costs is the time and money costs like research cost, brokerage etc., for buying and selling securities.
Tax costs include the Securities transaction tax, Stamp duty etc.
Q 35.

PMS fees is not a part of Rebalancing Cost.

Q 36.
Which of these incomes will NOT be earned by a PMS client?
Interest income
Capital gains from sale of business
Dividend income
Capital gains from sale of securities

0 Un Attempted

CORRECTANSWER:

Capital gains from sale of business

Explanation:
A PMS Client can earn:

• Income from dividend on shares and units of mutual funds

• Income from interest on Fixed Income Securities

• Short-term and/or long-term capital gains on sale of Securities

• Business Income from purchase and sale of Securities if gains are categorized as business income.
Q 37.

An investor has a limited and low means of income. Which of these goals should he give a low priority?
Buying a house for his own residence
Buying a health insurance
Buying a Multi Utility Vehicle
Providing for children higher education

0 Un Attempted

CORRECT ANSWER:

Buying a Multi Utility Vehicle

Explanation:

When a person has low income, then there are some goals which will have a low priority. There are goals that are not particularly painful if they are not achieved. These could range from
buying a farm house to a luxury car.

Clause 12(B) of Schedule III of SEBI (Portfolio Managers) Regulations relate to ______.
It relates to Speculative and Risk trading
It relates to Insider trading
It relates to Institutional trading by foreign institutions
It relates to Proprietary trading

0 Un Attempted

CORRECTANSWER:

It relates to Proprietary trading

Q 38.
Explanation:

The Code of conduct for the portfolio manager is specified in the Schedule III of the SEBI PMS Regulation.

Clause 12 (A) and 12(B) state that -

12. (A) A portfolio manager or any of its employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-
real time, unless a disclosure of his long or short position in the said security has been made, while rendering such advice.

(B) In case an employee of the portfolio manager is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short
position in the said security, while rendering such advice

There are several benefits of economies of scale for a mutual fund. Which of these is NOT a benefit of economies of scale for a mutual fund?
Providing all required information
Negotiating better terms with brokers
Costs on investment research
Engaging professional managers

0 Un Attempted

CORRECTANSWER:

Providing all required information

Explanation:

Pooling of large sums of money from many investors makes it possible for the mutual fund to engage professional managers for managing investments. Individual investors with small
amounts to invest cannot, by themselves, afford to engage such professional management. Large investment corpus leads to various other economies of scale.

For instance, costs related to investment research and office space gets spread across investors. Further, the higher transaction volume makes it possible to negotiate better terms with
Q 39.
brokers, bankers and other service providers.

A company's market beta is 1.25 and the risk free rate is 6 percent. What is the estimated equity return as per CAPM if the market risk premium in the country is 9
percent ?
9.75%
17.25%
: 21%
23.5%
0 Un Attempted
CORRECTANSWER:
17.25%

Explanation:
As per Capital Asset Pricing Model (CAPM), the required return on a security or portfolio is computed as:

Required return = Rf + p (Rm - Rf)

Rf = Risk free return, p = Beta of the security/portfolio , (Rm - Rf): Market risk premium

Substituting, we get

Required return = 6 + 1.25 (9)

= 6 + 11.25

= 17.25% (Note - The question states that the market risk premium is 9%. So we have to use the same.)
Q 40.
What are the bonds known as which are issued by Government Agencies?
Government Bonds
Public Sector Bonds
Agency Bonds
Public Securities 0 Un Attempted

CORRECTANSWER:

Public Sector Bonds

Explanation:
Government Agencies / Statutory Bodies and Public Sector Undertakings issue Public Sector Bonds.

(Central or State Governments issue Government bonds)

Q 41.
For which category I categories of FPIs is Section 9A of the Income Tax Act 1961 NOT applicable?
Category I FPIs only
Category II FPIs only
Both of the above
None of the above

0 Un Attempted

CORRECTANSWER:

Category I FPIs only

Explanation:

Some of the conditions mentioned in Section 9A of the Income Tax Act are not applicable to an investment fund set up by the Government or the Central Bank of a foreign State or a
sovereign fund or Category I FPI registered under SEBI (FPI) Regulations, 2019.
Q 42.
What does ‘Up front’ mean under the PMS regulations?
A Portfolio Manager will not charge any fees first and then calculate the total return generated on the fund
A Portfolio Manager will not deduct his fees before he distributes the benefits to the client
A Portfolio Manager will not charge any amount of performance fee as wished
A Portfolio Manager will not charge any fees at beginning before providing any service to client

0 Un Attempted

CORRECT ANSWER:

A Portfolio Manager will not charge any fees at beginning before providing any service to client

Explanation:
As provided in Regulation 22 (11) of the PMS Regulations, no upfront fees shall be charged by the Portfolio Managers, either directly or indirectly, to the clients.
Q 43.

______ is the top most attribute while choosing a comparable benchmark index.
Number of securities
Investment approach
Blue chips in the index
Measurability of performance

0 Un Attempted

CORRECT ANSWER:

Investment approach

Explanation:

GIPS(Global Investment Performance Standards)- defines Benchmark as an independent rate of return (or hurdle rate), forming an objective test of the effective implementation of investment
strategy.

It is a standard or point of reference. It is a collection of investment opportunities or securities or risk factors which represent the investment characteristics and investment approach of the
portfolio being evaluated against it.

______ can be a day count convention in the Fixed Income markets of the world.
Actual/Actual
Actual/365
Actual/360
Q 44.

All of the above

0 Un Attempted

CORRECT ANSWER:

All of the above

Explanation:

In the money market the day count convention followed is actual/365, which means that the actual number of days in a month is taken for number of days (numerator) whereas the number of
days in a year is taken as 365 days.

Hence, in the case of T-Bills, which are essentially money market instruments, money market convention is followed. In some countries, participants use actual/actual, some countries use
actual/360 while some use 30/actual.

Before SEBI issues the certificate of registration to a PMS, it has to ensure that the applicant has appointed : A. Compliance Officer B. Principal Officer C. Atleast
five person who are graduate from a university recognized by Central or State government and has atleast 2 years experience in securities market related
activities
All A, B and C
Only A and B
Only B and C
Only A and C
Q 45.

0 Un Attempted

CORRECTANSWER:

Only A and B

Explanation:

Before issuing a certificate of registration, the regulator will ensure whether -

In addition to the Principal Officer and Compliance Officer, the PMS applicant has in its employment at least one person who has a graduation from a university or an institution recognized by
the Central Government or any State Government or a foreign university; and an experience of at least two years in related activities in the securities market including in a portfolio manager,
stock broker, investment advisor or as a fund manager.

Mr. Soham is a fund manager and he has invested the funds in two stocks A and B in the ratio 6 : 4 respectively. The beta of stock A is 1.2 and the beta of stock B
is 0.6. Calculate the Portfolio Beta.
: 1.74
0.96
0.42
1.09

0 UnAttempted

CORRECTANSWER:
Q 46.

0.96

Explanation:
The funds have been invested in the ratio of 6 : 4 in stocks A and B. So the share of stock A is 60% ie. 0.6 and stock B is 40% ie. 0.4

The beta of Stock A is 1.2 and stock B is 0.6

Portfolio Beta = (0.6 X 1.2) + (0.4 X 0.6)

= 0.72 + 0.24 = 0.96

Is it correct for the PMS to execute Off-Market transactions in the clients account?
Yes, when it is required for providing margin for client’s own positions
Yes, when it is for dealing in unlisted securities
Yes, when it is for settlement of client’s own trades
All of the above

0 Un Attempted

CORRECTANSWER:

All of the above

Q 47.
Explanation:

As per the SEBI's Do’s and Don’ts for the portfolio managers :

The portfolio manager shall not execute off market transfers in client’s account except: (a) for settlement of the clients’ own trades; (b) for providing margin/ collateral for clients’ own positions:
(c) for dealing in unlisted securities in accordance with the regulations: (d) with specific consent of the client for each transaction; (e) for any other reason specified by SEBI from time to time.
Q 48.
_______ of a Futures Contract is not decided on the date of entry into the contract.
The maintenance margin
The discounting rate
The quality of the asset to be exchanged
The quantity of the asset to be exchanged

0 Un Attempted

CORRECTANSWER:

The discounting rate

Explanation:
In a futures contract the quality, the quantity, the margins, the time etc are all decided in advance. There is no discounting rate in futures contract.

(Maintenance margin is the minimum amount that must be maintained at any given time in your account while trading in futures)

(The discount rate is the interest rate used to determine the present value of future cash flows in a discounted cash flow analysis.)