NISM Series XXI-B: Portfolio Managers Cert. Mock Test (Set 3)

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1 / 50

There seems to be a need for a theory of active portfolio management because ________________.

a) Some portfolio managers have produced sequences of abnormal returns that are difficult to label as lucky outcomes.

b) Some anomalies in realized returns have been persistent enough to suggest that portfolio managers who identified these anomalies in a timely fashion could have outperformed a passive strategy over prolonged periods.

c) The "noise" in the realized returns is enough to prevent the rejection of the hypothesis that some money managers have outperformed a passive strategy by a statistically small, yet economic, margin.

d) A, B, and C.

2 / 50

2. Which of the following statements are incorrect when it comes to calculating the Sharpe ratio?

a) Considers diversification potential of portfolio

b) Measures reward to variability

c) Ideal for mutually exclusive portfolios

d) None of the above

3 / 50

______ is recommended for investors who have well-diversified portfolios.

a) Jensons alpha

b) Treynor ratio

c) Sharpe ratio

d) Both 2 and 3

4 / 50

A limited liability partnership must invest a minimum amount of ______ in PMS.

a) Rs.30 lakh

b) Rs.50 lakhs

c) Rs.25 lakhs

d) Rs.45 lakhs

5 / 50

The price of ABC Ltd. equity shares has reached its resistance line. According to technical analysis, this is a good time to _____________.

a) Buy the shares of ABC Ltd.

b) Hold the shares of ABC Ltd.

c) Sell the shares of ABC Ltd.

6 / 50

6. ______ combine features of both open-ended and close-ended schemes.

a) Semi – closed funds

b) Hedge funds

c) Semi – open funds

d) Interval funds

7 / 50

The information ratio of a portfolio is determined by ______.

a) (Rp – Rb)/Stdev (Rp – Rb)

b) (Rp – Rb)/ Cor (Rp – Rb)

c) (Rp – Rb)/ Var (Rp – Rb)

d) (Rp – Rb)/ Cov (Rp – Rb)

8 / 50

The liquidity of an investment refers to the ______ of the instrument.

a) Intrinsic value

b) Marketability

c) Profitability

d) Time decay

9 / 50

_______ is a mandatory expense for investors when participating in PMS (Portfolio Management Services).

a) Auditors fees

b) Notary charges

c) Brokerage charges

d) Registrars fees

10 / 50

10.

Which of these factors is NOT taken into account by SEBI when determining a person’s eligibility according to the Fit and Proper Person Declaration.

a) Financial solvency

b) Integrity in character

c) Office of profit held

d) Conviction orders

11 / 50

11.

Which of these costs can be classified as part of Operating Expenses?

a) Courier Charges

b) Audit fees

c) Brokerage charges

d) Fee for Portfolio manager’s services

12 / 50

12.

The portfolio risk is influenced by the ______.

a) Individual standard deviations

b) Correlation across the investments

c) Weights of the investments

d) All the above

13 / 50

13.

According to SEBI Regulations, what is the required application amount for a QIB to attain the status of an Anchor Investor?

a) Rs. 10 crores

b) Rs. 10 lakhs

c) Rs. 5 crores

d) Rs. 1 crore

14 / 50

14.

PMS can be categorized based on the product class as ______.

a) PMS by brokerage houses

b) Multi Asset based PMS

c) Boutique PMS houses

d) All the above

15 / 50

15.

Among the benefits of economies of scale for a mutual fund, which one is NOT considered a benefit?

a) Negotiating better terms with brokers

b) Costs on investment research

c) Engaging professional managers

d) Providing all required information

16 / 50

16.

The calculation process for determining the ______ is identical to TWRR.

a) AMR

b) GMR

c) Internal rate of return

d) Money weighted rate of return

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17.

What types of securities can a foreign portfolio investor invest in?

a) Derivatives traded on a recognised stock exchange

b) Rupee denominated credit enhanced bonds

c) Domestic Mutual Fund Schemes

d) All of the above

18 / 50

18.

The extra return that an investor demands beyond the usual rate of return when dealing with a risky investment is known as ________.

a) Alpha

b) Risk premium

c) Risk free rate of return

d) Both b and c

19 / 50

19.

An anchor investor is a qualified institutional buyer who applies for a value of ______ or more in a public issue conducted through the book-building process in compliance with SEBI regulations.

a) Rs.5 crore

b) Rs.10 crore

c) Rs.4 crore

d) Rs.1 crore

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20.

________ is not associated with Commodity Derivatives Exchanges in India.

a) CCIL

b) ICEX

c) NCDEX

d) MCX

21 / 50

21.

The portfolio manager can engage in securities lending only when authorized by the client in writing.

a) False

b) True

22 / 50

22.

Which of the following statements are accurate regarding depository receipts?

a) Represents shares of a foreign company

b) Traded on a stock exchange outside the country

c) Issued in local currency

d) Both 2 and 3

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23.

The terminal value can be calculated using the _______ method, where the cash flow is expected to grow steadily at a modest rate indefinitely after the high growth period.

a) Annual growth method

b) Weighted average growth method

c) Perpetuity growth method

d) Compounded growth method

24 / 50

24.

Hedge funds belong to the category of ______ AIF (Alternative Investment Fund).

a) Category I

b) Category II

c) Category III

d) Either 1 or 2

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25. If a client’s portfolio is redeemed in part or in full after a period of ______ from the date of investment, no exit load will be applicable.

a) 1 year

b) 5 years

c) 2 years

d) 3 years

26 / 50

26.

The decline in IT sector stocks due to changes in immigration laws in the USA represents what type of risk?

a) Market Risk

b) Speculative Risk

c) Business Sector Risk

d) Economy Risk

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27.

________ claims can include compensation for losses related to any lawsuit filed against the directors and officers, covering legal fees as well.

a) R and O Insurance

b) D and O Insurance

c) F and O Insurance

d) All the above

28 / 50

28.

Engaging with institutional investors, HNI investors, wealth managers, portfolio managers, family offices, and representatives of foreign investors to arrange investor meetings and private marketing events is a __________ service.

a) Post-Investment Services

b) Post-Commitment Services

c) Pre-Investment Services

d) Pre-Commitment Services

29 / 50

29.

_________ involves following a Directional Strategy, especially a Dedicated-Long Directional Strategy.

a) Fund TGR

b) Fund LNM

c) Fund LMN

d) Fund GMS

30 / 50

30.

For an Annual Income between Rs.2 crore and Rs.5 crore, the effective tax rate is __________.

a) 36.25%

b) 39%

c) 42.74%

d) 59%

31 / 50

31.

__________ is the ratio between the total distributions made by the fund and the total capital contributions made by the investors.

a) Total Value to Paid-in Capital

b) Residual Value to Paid-in Capital

c) Distributions to Paid-in Capital

d) Potential Loss of Investment

32 / 50

32.

Commitment periods for closed-end funds usually extend from _______ from the final closing date.

a) 3-6 years

b) 2-4 years

c) 3-5 years

d) 2-5 years

33 / 50

33.

True or False: A minimum of five years of experience is mandatory in investment management or investment advisory services, as per the SEBI Regulations 2012.

a) False

b) True

34 / 50

34.

The __________ section furnishes details about possible conflicts of interest between the fund’s components and its stakeholders, along with the measures adopted by the Fund to address these conflicts effectively.

a) Conflict of Interest

b) Risk factors

c) Net Asset Value of the Units

d) Conflict of risk

35 / 50

35.

True or False: SEBI provides only observations on the PPM submitted to them and does not approve the document.

a) False

b) True

36 / 50

36. _________ are specifically attributable to a series of units, shall be borne only by that Series of Beneficiaries, and shall accordingly be allocated in the books of the Fund to that series of units.

a) Fund Liabilities

b) Fund Expenses

c) Series Expenses

d) Series Liabilities

37 / 50

37. _________ is the total return gained on investments, without subtracting fund expenses, costs, management fees, and incentive fees.

a) Pre-Incentives

b) Post-Incentives

c) Post-fees return

d) Pre-fees return

38 / 50

38.

A _______ of interest can arise if the Distributor is a relative, associate, or an affiliate or subsidiary of such a fund, investment manager, or sponsor, according to the SEBI Regulations.

a) Pass-backs

b) Distributor conflict

c) Potential conflict

d) Soft Dollar Arrangements

39 / 50

39.

_________ funds employ varied or intricate trading strategies.

a) Category III AIF

b) Category I AIF

c) Category II AIF

d) None of these

40 / 50

40.

True or False: The Central Government has notified the Registrars to Issue and/or Share Transfer Agents to act as collecting agents.

a) False

b) True

41 / 50

41.

Comparison of the historical performance of the fund/scheme with key market indices and relevant benchmarks is a historical performance metric of the _________.

a) Category I AIF

b) Category III AIF

c) Category II AIF

d) None of these

42 / 50

42.

True or False: Alternative investments require even greater care in meeting the challenges of performing due diligence.

a) False

b) True

43 / 50

43.

__________ refers to any fund established or incorporated in India as a trust, company, limited liability partnership, or a body corporate, which has been granted a certificate of registration as a Category I or a Category II Alternative Investment Fund.

a) Investment Fund

b) Oriented Fund

c) Capital equity Asset

d) Capital Asset

44 / 50

44.

True or False: Capital loss accumulated at the level of Category III AIF as of March 31, 2019, can be considered the loss of a unit holder who has held units in the fund as of March 31, 2019, for a minimum period of 12 months.

a) False

b) True

45 / 50

45. A distribution having Skewness of less than zero indicates a ________ skewed distribution.

a) Unity

b) Negatively

c) Zero

d) Positively

46 / 50

46. Model Code Of Conduct for Category III AIF Distributors Maintain high standards of integrity, promptitude and fairness in the conduct of business as __________.

a) Investee

b) Investment manager

c) Investor

d) Distributors

47 / 50

47. The Distributor should be able to prepare a __________ to potential investors in the fund/scheme.

a) Sales Pitch

b) Premiums Pitch

c) Investment Pitch

d) Taxing Pitch

48 / 50

48. Indian AIF Markets have witnessed a large influx of capital from ________, in listed equities, start-ups, infrastructure development and in the AIF market.

a) Sovereign Wealth Funds

b) Insurance Companies Fund

c) Pension Funds

d) Fund of Funds

49 / 50

49. Private debt funds also finance sub-ordinate debt, in the form of ‘leveraged loans’ which is used in funding companies with high amount of senior debt on their balance sheet. State whether true or false.

a) False

b) True

50 / 50

50. __________ is paid by the fund to the investment manager, which usually ranges between 1 percent and 2.5 percent of the capital committed during the commitment period.

a) Operational Expenses

b) Set-up Costs

c) Set up Costs

d) Management Fee

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NISM Series XXI-B: Portfolio Managers Cert. Mock Test (Set 3)