NISM Series XXI-B Portfolio Managers Cert. - Full-Length Test

The stipulated time frame for the ‘Designated Person’ to enter into a contra trade in securities as per SEBI (Prohibition of Insider Trading) Regulations is ______.

In the US markets, it is some times observed that prices fall in December and rise in January. What is this phenomenon known as ?

The maximum value that Information Coefficient can take is ______.

Identify the FALSE statement with respect to a Futures Contract.

Mr. Hakim is an HNI investor. Is it true that he can invest in a PMS only through an authorised PMS Distributor?

_________ is an approved form of deployment of client’s funds by PMS.

The document(s) which is/are required to claim benefits under Double Taxation Avoidance Agreements is/ are _______.

A religious trust wants to invest Rs. 25 lakhs in a PMS. Will it be eligible for it?

A Portfolio Manager has to preserve his books of accounts for inspection by SEBI for _____ years.

__________ will not influence the cost of rebalancing a portfolio

To protect his portfolio, a fund manager buys a PUT option of the exact cover by paying a premium of Rs. 75000. Due to a downfall in the market, the value of the portfolio goes down by Rs. 3 lakhs. Calculate the profit / loss due to this hedging strategy.

In portfolio management, which type of preparedness has to be done for managing risk like a Pandemic?

How is diversification of risk in an equity portfolio achieved?

Identify the statement which refers to the term ‘ Net of fee returns.’

Mr. Singh is a fund manager and is planning to invest in two bonds. The maximum investment horizon he has is 12 years. He has finalized to invest 58% of the funds in a bond which has a duration of 15 years. Calculate what should be the duration of the second bond and the amount which has to invested in it?

A portfolio manager will prefer a financial market which has _____________ .

When does a portfolio need rebalancing?

Ms. Mahi is a fund manager and she is correct 75% of the times. She is interested to achieve an Information Ratio of 3. Calculate how many forecasts should she make in that given period to achieve this?

___________ as a measure of return is permitted by SEBI for reporting performance of liquid funds and money market funds.

Is it true that Swaps and Swaptions are one and the same?

A. Swaps and Swaptions are same as both of them actually result in exchanges of interest and principal in different currencies

B. Swaps and Swaptions are not the same as Swaps are exchanges of interest and principal in different currencies and Swaptions are options to exchange fixed and floating interest rates

Mr. Robert has made several foreign currency transactions in a month. Should the related financial institution furnish the information about these transactions as per the Prevention of Money Laundering Act 2002? A. No, as they were made in foreign currency B. Yes, in case they are suspicious C. Yes, if they are cash transactions.

The annual return of a portfolio is 12% and its standard deviation is 15%. Calculate the 99% 1 day VaR of a portfolio worth Rs. 75 lakhs. Note : 1. Assume 250 days in a year 2. Confidence level statistic at 99 percent confidence interval is 2.33 3. Round off to 2 decimals.

Three funds X, Y and Z beat their benchmark returns by 4%, 5% and 7% respectively. their excess returns are volatile to the extent of 3%, 5% and 6% respectively. From this data calculate how much did the information ratio of fund X beat that of fund Z.

Ms. Sudha is an investor and has a risk aversion of 3. A portfolio manger offers her a customised portfolio which will generate a return of 12% p.a. with a standard deviation of 6%. Will Ms. Sudha accept this portfolio for investing in? If she accepts it, what will be the Utility? (Note – The ongoing risk free rate is 7%)

A portfolio manager, who is following active strategy, will put forward which of the following arguments regarding Efficiency of Markets? A. Information is not reflected very accurately in the price B. Information is not quickly in the price C. Financial markets are not strongly efficient all the time.

________ is/are considered as a person for the purpose of levying income Tax. A. Minority Religious Trust B. Non-Profit organization organized as Association of Persons.

Which of these statement is TRUE with respect to volatility in bond prices?

When the objective of the investment is to mitigate the inflation risk, ___________ will be the most relevant benchmark.

A bond fund manager is expecting a rise in interest rates by about 2% in future. The current Duration of his bond portfolio is 10 years. Identify the response of the fund manager which will reflect a Directional Call strategy.

A company is frequently trading in its own equity shares for the last 2-3 years. Sometimes it also took short term loans for this purpose. Now the company wants the profits earned in this process to be treated as Capital Gains. Can it convince the Income Tax officials? A. No, as the trading was leveraged with borrowing (short term loans) B. No, as the trading was done frequently, it will be considered as Business Income C. Yes, if the company shows these as investments in the books of accounts

Which of the following does not constitute a part of the portfolio management process?

The factor ‘Quality’ for enhanced indexing can be measured by Return on Assets. State whether True or False?

Mr. Rohan, a fund manager, has invested in four bonds P, Q, R and S. The weightage of these bonds are 20%, 20% , 30% and 30% in the portfolio and the YTMs are 8.5%, 7%, 9% and 7.5% respectively. Calculate the expected Yield at maturity. Also what is the assumption in this strategy? A. It is assumed that the bonds should have the same frequency of coupon payment B. It is assumed that there are no transaction costs during the term of the investment.

An investor is expecting three possible scenarios Boom, Normal and Recession in the next one year. The investor assigned a 60 percent probability to a Normal scenario. Also the odds of a Boom are 3 times than that of a Recession. Calculate the probabilities of Boom and Recession scenarios.

Identify the correct statement with respect to investing in Floaters

Category III AIFs are liable to pay income tax on income earned as __________ on transfer of securities.

Investment Managers can also use a GARP ___, which combines the tenets of Value Investing and Growth Investing, while making stock selection.

If the equity share price falls, the fund will benefit from its short position and continue to earn fixed income, in the form of coupons on the convertible security. State Whether True or false.

Identification of ___________ is imperative for the fund, to establish the natural person who ultimately owns or controls the institution which is investing in the Category III AIF.

Employees who do not respect the Distributor’s Confidentiality Policy should be held liable for disciplinary action. The employees should not ___________.

A _____________ is a Trust wherein the trust beneficiaries, and their respective beneficial interests, are ascertainable as per the terms of the Indenture of Trust or the Trust Deed, at all times during its existence.

Category III AIFs structured as closed-ended funds offer limited redemption options to the investors, as compared to _______________.

_________ is computed for investors in a series of units to report the value of assets attributable per unit, as reduced by the liabilities and expenses apportioned to such series, as on a Valuation Day.

__________ the trust is treated as an ‘association of persons’ and tax is charged on the entire income of the trust at the maximum marginal rate.

In case of a body corporate, net worth is at least Rs. 50 crore. State Whether True or False.

____________ is a generic term for evaluating corporate behavior and is used interchangeably with sustainable, responsible, impact or ethical investment.

______________ funds that seek later stage investment opportunities do not use any leverage at fund level or indulge in complex trading operations.

_______________ Agreement records the terms on which an investor participates in a fund.

____________ measure of volatility of the fund, with respect to the relevant benchmark.

The ______________ is granted by SEBI, for the specific Category of AIF applied for by the applicant.

Distressed debt financing through private debt funds is also catching on in India in the form of refinancing settlements with banks and insolvency resolution schemes under the _____________.

A _____________ focuses on delivering absolute returns for investors by taking either a net long position or a net short position in the selected stocks or a broad-based market index.

_____________ can also be used for comparison of the returns generated by the Category III AIF with the returns generated by other comparable funds.

Category III AIFs are formed for the purpose of generating ___, by implementing diversified investment strategies, across different asset classes.

___________ is responsible to oversee the functions such as the issue of new class of units, transfer of units, full and partial redemption calls, payment of exit load, expenses and fees by the selling unit holder.

_____________ is usually made in accordance with the capital call schedule, mutually agreed with the investors in the Contribution Agreement.

Total income exceeding Rs.5 crore the Surcharge Rate is 37%. State whether True or False.

A change in the Option ________________ indicates the change in the probability of the option being in the – money, or generating a profit, at expiry.

A securitization company floated by a bank is not an AIF under the SEBI (AIF) Regulations 2012. State whether True or False.

A Category III AIF will be liable to pay tax as per the provisions of Section 112A, provided the fund has paid the applicable ___ on the purchase and sale of equity shares.

____________ charged by the Fund primarily includes Management Fees and Performance Fees.

The Accredited Investors investing in “Large Value Fund for Accredited Investors” or any Category III AIF launched exclusively for the investor in which regulatory concessions have been availed, shall not be eligible to withdraw the Consent. State Whether True or False.

Percentage of equity shareholding of the Category III AIF shall be computed with reference to the annual average of the monthly averages of the ______________ of the Fund.

Category III AIFs can be deemed to be connected persons, as specified in the SEBI Regulations, and hence shall communicate, provide or allow access to unpublished price sensitive information, except in furtherance of business purposes, performance of duties or discharge of legal obligations. State whether true or false.

____________ entity is least likely to be a permissible legal structure, seeking registration as a Category III AIF under the SEBI Regulations.

A ___________ is a Trust which can be revoked by the Settlor of such Trust, at their discretion or as per the consent of the beneficiaries.

Investment managers prefer to include a catch-up clause in the Contribution Agreement, with a high catch-up rate. State whether True or False.

Investment Managers are permitted to invest maximum ____________ of the investable funds in one investee company directly or through investment in units of other Alternative Investment Funds.

The _______________ Fund has a Co-investment Arrangement with the Onshore Fund and the Offshore investment manager has the option to enter into an Investment Advisory Arrangement with the Domestic Investment Manager.

____________ is a statutory regulatory body entrusted with the responsibility to regulate the Indian Capital Markets.

Surcharge applicable on Dividend Income will be at 25%, as the income of Fund TI, excluding Capital Gains under sections 112A and 111A, is above Rs.2 crore and less than ________________.

___________ of the Fund is computed by adding the exposure in all long positions, and exposure in short positions.

The Category of Alternative Investment Funds which are permitted to take leverage positions, through Futures and Options (F&O) contracts, structured products, margin trading and arbitrage strategies, are known as _____________.

___________ play a crucial support function to Investment Managers.

The ____________ appoints the Trustee by signing the Trust Deed and the Investment Manager by signing the Investment Management Agreement, to form part of the Category III AIF.

Eligibility Criteria for accreditation is ______________.

The unit holders in a Category III AIF would primarily earn income from the streams are ______________.

_________________ represents the rate of return at which the present value of the cash outflows for the investors is equal to the present value of inflows.

_______________ type of funds invest in start-ups, early-stage ventures, social ventures, SMEs, infrastructure or other sectors, areas which the government and regulators consider as socially or economically desirable.

____________ reviews the appointment of the trustee at the time of registration of the AIF and subsequent changes need to be notified and approved by SEBI.

In case of joint investors in a fund, the following additional conditions shall apply –

(i)If joint holders are parent(s) and child(ren), at least one person should independently fulfil the eligibility criteria for accreditation.

(ii) If foreign investors seeking accreditation, the eligibility should be determined based on the rupee equivalent of their income and/or net worth, as applicable.

(iii) If joint holders are spouses, their combined income/net worth should fulfil the eligibility criteria for accreditation.

The schedule should mention the amount of initial drawdown and the amount and timings of the subsequent drawdowns to be made during the __________________ period, which can be a fixed periodic drawdown.

_______________ of the following securities would least likely be valued at Fair Market Value, by a Category III AIF.

_____________ is also chargeable on services provided by external service providers, such as Fund Administrators, Registrars, Custodians, Auditors, Brokers, Investment Advisors and other third-party professional experts.

Category II AIF, Act with required skill, care and diligence in the conduct of business as a Distributor. State whether true or false.

________________ the risk of potentially fraudulent activities by third-party service providers, such as data theft, misuse of confidential data, and sharing such data without seeking consent.

Investors willing to invest in Category III AIFs must be aware of such risks and accordingly be capable of climbing the __________________, in search of superior returns.

____________ investors and Institutional Investors diversify their portfolios to mitigate concentration risk on investing in only one asset class.

_____________ calculation is independent from the fund management function, and is disclosed to investors at quarterly intervals for close-ended funds, and monthly intervals for open-ended funds.

______________ is a fast-emerging investment protocol in the world of corporate investments, more emphatically in the realm of alternative investing.

The leverage taken by a Category III AIF shall not exceed 2 times of the ______________ of the fund.

A _____________ is banned from charging upfront fees, such as Registration Fees or Subscription Fees, to the investors directly or indirectly.

Model Code Of Conduct for Category III AIF Distributors Disclose all material information including Hurdle Rate, Management Fees, Additional Returns and Catch-up provisions, if any, expenses chargeable to the Fund and expenses to be borne by the _______________.

________________ process is crucial for the Investment Manager and investors, to determine the fair amount of Incentive Fees payable, as on a particular Valuation Day.

Any gains arising from these transactions shall be treated as ‘Profits and Gains from Business and Profession’ and the fund should be liable to pay tax on such income at the Maximum Marginal Rate of Tax that is, _______________.

The Fund’s assets comprise the _______________.

Alternative investment is defined as a _____________ that does not fall into one of the conventional investment categories.

_____________ entities can least likely be a Service Provider for a Category III AIF.

______________ are suitable to Pre-Commitment Services.

(i) Preparation of Pitch Books and Distribution Kits

(ii) Facilitating Fund Due Diligence by investors

(iii) Encryption of electronic information and safeguarding databases

(iv) Store and lock paper documents

The ______________ instruments are now considered as non-debt instruments.