NISM Series XXI-B: Portfolio Managers Cert. Mock Test - Free Demo

The average annual arithmetic return is the simple average of individual total yearly returns. This measure provides a straightforward calculation of the average return over a period by summing up the individual annual returns and dividing by the number of years.

Beta reflects the sensitivity of the fund’s return to fluctuations in the market index. It measures the degree of correlation between the fund’s returns and movements in the overall market. A beta of 1 indicates the fund moves in line with the market, while a beta greater than 1 implies higher volatility, and a beta less than 1 suggests lower volatility compared to the market.

If the rupee has appreciated in value compared to USD, when the interest is received in dollars and converted into rupees, the investor will receive less in rupees than expected due to the stronger rupee.

Re-investment risk arises from the possibility that income flows received from an investment at the coupon rate may not be able to be reinvested at the same interest rate. This risk is associated with the uncertainty of future interest rates.

A Principal Officer needs to be designated, and they are responsible for ensuring compliance with the provisions of the Prevention of Money Laundering Act (PMLA).

Bond price volatility is directly related to the term to maturity. Longer maturity bonds experience larger price changes for a given change in yields. As interest rates change, the prices of bonds with longer maturities are more sensitive, leading to higher volatility in their prices.

EPS is calculated as Profit after tax (PAT) divided by the number of outstanding common shares of the company. It is a key financial metric that indicates the portion of a company’s profit attributable to each outstanding share of common stock.