Practice Set - 2 | Practice Set | NISM Series XXI-B: Portfolio Managers Certification Examination

Question 1

Can an undiversified portfolio have the same beta as a diversified portfolio?

Question 2

Can a security with lower total risk have a higher beta than another security?

Question 3

A portfolio manager focuses only on eliminating company-specific risk. Which risk still remains unavoidable?

Question 4

A fully diversified portfolio still experiences significant losses during a market crash. According to Capital Market Theory, this loss is mainly due to:

Question 5

The Capital Market Line is applicable primarily to:

Question 6

A stock with beta less than 1 is generally expected to:

Question 7

According to CAPM, the expected excess return of a security is proportional to:

Question 8

Can a security have negative total return but still lie above the Security Market Line?

Question 9

An investor borrows at the risk-free rate to invest more in the market portfolio. This action theoretically places the investor:

Question 10

A portfolio below the Capital Market Line is considered:

Question 11

A beta of zero most likely indicates that a security:

Question 12

Can a diversified portfolio still perform poorly if the overall market declines sharply?

Question 13

Can a high-beta stock sometimes decline even when the market rises?

Question 14

A security lies above the Security Market Line. According to CAPM, the security is likely:

Question 15

According to CAPM, investors holding inefficient portfolios are likely:

Question 16

The slope of the Capital Market Line primarily represents:

Question 17

A security plotted exactly on the Security Market Line is considered:

Question 18

Which assumption is most critical for the existence of the Capital Market Line?

Question 19

Can a negative beta asset theoretically reduce overall portfolio systematic risk?

Question 20

The market portfolio in Capital Market Theory theoretically has a beta of:

Question 21

Which of the following best explains why unsystematic risk is not rewarded under CAPM?

Question 22

Can two securities with identical beta values have very different company-specific risks?

Question 23

Can two securities with identical total volatility have different expected returns under CAPM?

Question 24

An investor expecting higher return without accepting additional systematic risk is effectively seeking:

Question 25

A stock with beta of 2 is most likely to:

Question 26

A stock has a beta of 1.5. If the market rises by 10%, the stock is expected to rise approximately by:

Question 27

A portfolio manager adds more securities to a portfolio but notices portfolio risk stops declining significantly after a point. This mainly indicates:

Question 28

Can a stock with high company-specific risk still have low expected return under CAPM?

Question 29

Which of the following risks is most likely irrelevant in determining expected return under CAPM for a diversified investor?

Question 30

Practice Set - 2