NISM Series XXI-B Portfolio Managers Cert. Mock Test -2

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1 / 50

_________ is a pension cum investment scheme launched by the Government of India to provide old-age security to citizens of India.

a) National Pension System

b) Pension fund

c) Corporate Sector Model

d) All the above

2 / 50

The conditions for obtaining a certificate of registration under the Portfolio Managers Regulations 2020 are:

a) The applicant is a body corporate

b) The applicant has appointed a compliance officer

c) The applicant has the necessary infrastructure like adequate office space, equipment and the manpower to effectively discharge the activities of a portfolio manager

d) All of the above

3 / 50

_______ was to be provided to the prospective client along with the account opening form by the Portfolio Management Service (PMS).

a) Asset Allocation Decision

b) Disclosure document

c) Fact Sheet

d) None of the above

4 / 50

The counterparty risk in a futures contract is mainly reduced through __________.

a) Collateralization by both parties

b) The limits on positions and trading volumes

c) Settlement on gross basis between two parties

d) The functions of the clearing corporation

5 / 50

_______ of the following would most closely resemble the market portfolio.

a) Stocks and bonds

b) Stocks

c) Stocks, bonds, foreign securities options and coins

d) Stocks, bonds and foreign securities

6 / 50

In a rights issue, the offer is required to be made to the existing shareholders based on the _________ of their existing holdings.

a) Sweat allot

b) Pro-rata

c) Discount on equity

d) Preferential allot

7 / 50

_______ are post-trading activities that constitute the core part of the equity trade life cycle.

a) Trading

b) Clearing and Settlement

c) Exchange Traded Markets

d) Over-The-Counter Market

8 / 50

_________ is directly linked to the term to maturity; longer maturity bonds undergo more substantial price changes for a given shift in yields.

a) Bond price

b) Reinvestment risk

c) Interest Rate Risk

d) Bond price volatility

9 / 50

___________ is a privately pooled investment vehicle that gathers funds from sophisticated investors to invest according to a defined investment policy for the benefit of its investors.

a) Alternative Investment Fund

b) Portfolio Managers

c) Cole

d) Mutual Fund

10 / 50

When a customer submits a KYC identifier to a reporting entity, the entity shall download the KYC records from _______.

a) PML

b) CERSAI

c) CKYCR

d) KYC Identifier

11 / 50

A Portfolio Manager might not give certain information to SEBI, ____________.

a) The details of portfolio managed

b) The names of investors whose portfolio's they manage

c) Changes in registration certification

d) The networth of client's whose portfolio's they manage

12 / 50

__________ is a way of counting days in the global Fixed Income markets.

a) Actual/Actual

b) Actual/360

c) Actual/360

d) All of the above

13 / 50

An investor put Rs. 100 lakhs in an equity investment portfolio. The manager invested Rs. 75 lakhs in stocks, and Rs. 25 lakhs are in liquid funds. The equity part earned Rs. 7.5 lakhs, and the liquid fund had a 4% return. What is the ROI after considering the cash component?

a) 9.50%

b) 10%

c) 10.50%

d) 8.50%

14 / 50

_______________ represent ownership in a company that gives its holders the right to share in its profits and vote on the company’s matters.

a) Bonds

b) Equity Shares

c) Commercial Papers

d) All the above

15 / 50

Identify the correct statement regarding ‘Open Interest’.

a) Open Interest is the number of successful trades during a particular day

b) Open Interest is the number of derivative contracts that are not settled by the end of a particular day

c) Open Interest is the interest quoted shown by traders on a public screen

d) Open Interest is the number of derivative contracts which are booked by traders

16 / 50

If a Portfolio Manager thinks the stock market is too expensive and might soon go down, what should he do?

a) Assign more weight to equity till the time market corrects

b) He should adopt a wait and watch strategy

c) Rebalancing should be done depending on the investor psychology

d) Reduce weight in equity before the market corrects

17 / 50

______ is a deal made on a structured exchange to purchase or sell a set quantity of a commodity on a future date at a predetermined price.

a) Futures contract

b) Forward contract

c) Options contract

d) Swap contract

18 / 50

Determination of NAV should be done regularly.

a) Indian Rupee

b) Dollar

c) Both of the above

d) None of the above

19 / 50

Examples of Category I AIFs include _________.

a) Private Equity Funds

b) Social Venture Fund

c) A and B

d) Hedge Fund

20 / 50

Investment Managers can charge an Incentive Fee which is a share in ___ earned by the Fund, in excess of the Hurdle Rate set in the PPM.

a) Average units

b) Liquidity

c) Additional return

d) Loss

21 / 50

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 ___________.

a) Book value

b) Cash flow

c) Earnings

d) All of the above

22 / 50

The risk of default on obligations arising out of trading is controlled by the exchange by ________.

a) Imposing circuit filters

b) Blocking high value trades

c) Restricting types of investors

d) Imposing margins

23 / 50

The following entities can invest in PMS: __________.

a) Non-resident Indians (as per the RBI guidelines)

b) Individuals

c) Hindu Undivided Family

d) All the above

24 / 50

___________ is the risk associated with wars, terrorist acts, and tensions between states that affect the normal and peaceful course of international relations.

a) Regulatory risk

b) Geopolitical Risk

c) Liquidity risk

d) Political Risk

25 / 50

Financial assets are generically classified into two broad categories __________.

a) Bonds and deposits

b) Equity and gold

c) Debt and Equity

d) Real estate and gold

26 / 50

The _________ is the current value of a mutual fund unit.

a) Net value of return

b) Net Asset Value

c) Gross value of return

d) Gross asset value

27 / 50

_______ Indices represent Government of India bonds across 6 distinct duration buckets.

a) NIFTY T-Bills Indices

b) Government Securities Indices

c) NIFTY G-Sec Indices

d) Sovereign Securities Indices

28 / 50

__________ means minimizing or avoiding the chances of erosion in the principal amount of investment.

a) Capital Preservation

b) Capital Appreciation

c) Current Income

d) Required rate of return

29 / 50

________ is referred as an enhanced index-based investment, which tries to exploit market or investment factors to outperform a benchmark index.

a) Smart alpha

b) Smart delta

c) Smart beta

d) Market Timing

30 / 50

On the basis maturity, bonds with a year or less than a year maturity are terms as ___________

a) Money market securities

b) Government securities

c) Capital market securities

d) Both 1 and 3

31 / 50

To find value stocks, you can use the following main criteria (screens) __________.

a) Low Price-to-Earnings ratio

b) Low Price-to-Book ratio

c) Low PEG ratio

d) All the above

32 / 50

________ measure is useful for investors who wish to determine how well a company has produced value for its investors.

a) Profit added value

b) Market Value Added

c) Economic value added

d) All the above

33 / 50

An _________ does not result in increase in the share capital of the company since there is no fresh issuance of shares. The proceeds from the offer go to the offerors, who may be a promoter(s) or other large investor(s)

a) Employee Stock Ownership Plan

b) Qualified Institutions Placement

c) Offer for Sale

d) Employee Stock Ownership Plan

34 / 50

Mark to market margin is the _________ which an outstanding trade has suffered.

a) High Safety

b) Expected loss

c) Minimum loss

d) Notional loss

35 / 50

_________ team reaches out to the investors through mass media, marketing campaigns and through distribution channel.

a) Sales and Marketing Team

b) Human Resource team

c) Operations and services

d) Fund Management team

36 / 50

A bonus issue once announced cannot be withdrawn. State whether true or false.

a) True

b) False

37 / 50

Which kind of investors (personality) will keep bringing up the latest hot topic & They really do not have their own ideas about investments ?

a) Guardian

b) Adventurer

c) Celebrity

d) Individualist

38 / 50

An index comprises of three stocks, X,Y,Z, whose annual revenues are in the ratio of 1:2:3, respectively. What would be the percentage change in the factor weighted index between two points of time, if the prices of these three stocks move from Rs. 200, Rs. 400, Rs. 800 to Rs. 400, Rs. 600, Rs. 900, respectively?

a) 39.58%

b) 35.98%

c) 35.89%

d) 38.59%

39 / 50

The investment prescription that emerges from capital market theory is that every investor will take exposure to __________.

a) Portfolio R

b) Portfolio K

c) Portfolio L

d) Portfolio M

40 / 50

In Business cycle, products or businesses are called _________.

a) Recession-proof

b) Counter-cyclical

c) Development Objective

d) All the above

41 / 50

Find the coupon yield of a bond with a Rs. 14 coupon payment, Rs. 100 face value, and a market price of Rs. 108.

a) 14%

b) 8%

c) 11.84%

d) 12.96%

42 / 50

Ms. Harshita thinks that something will decrease in value because she took a ‘Put Option’ position.

a) The price of underlying will not go below strike price

b) The price of underlying will go below strike price

c) The price of underlying will not go below current market price

d) The price of underlying will not go above strike price

43 / 50

What does the secondary market do from the options below?

a) Provide information about public companies

b) Provide a platform for making public issues

c) Provide liquidity for securities issued

d) All the above

44 / 50

Figure out which of these things is a major problem when making a personalized benchmark.

a) It is difficult to find comparable securities

b) It is difficult to track the performance of the benchmark

c) It is difficult to decide the weights of the securities

d) The cost of maintenance of the benchmark is high

45 / 50

The reward for delaying using or enjoying something is called ______.

a) Market demand and supply

b) Real Risk Free rate

c) Inflation rate

d) Constant income

46 / 50

The present value is determined by reducing the value of each cash flow using a rate called _______.

a) Yield to maturity

b) Yield to call

c) Risk free rate of return

d) Coupon yield

47 / 50

The residential status of a Hindu undivided family is determined by its ___________.

a) Residential status of its manager

b) Place of control and management

c) Both 1 and 2

d) None of the above

48 / 50

Which of these aspects is excluded from the agreement between the portfolio manager and the client?

a) The provisions related to early termination of the PMS contract

b) The period of the PMS contract

c) The procedure of settling the clients account

d) The various portfolio schemes which are managed by the portfolio manager

49 / 50

Market Risk is the risk in stock investments that comes from _____________.

a) The price dynamics created by the underlying business profitability

b) The price dynamics to government intervention in the stock markets

c) The gap between book value and market value of an equity share

d) The price dynamics in the market created by various players

50 / 50

Find the statement about bonds that is TRUE.

a) The Face value of a bond and its Market value are always same

b) Some type of bonds need not be repaid

c) There cannot be embedded options in bonds

d) All bonds create a ownership right in a company

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NISM Series XXI-B Portfolio Managers Cert. Mock Test -2

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